Another week and another slew of important news.
In The Eurozone
All eyes were fixed on the ECB meeting with the Greek finance minister. It was not expected to produce an agreement but unfortunately, and despite rumours to the contrary not even a joint statement could be rescued from the negotiations.
There is no meeting of minds or intentions as Varoufakis, the Greek finance minister, following the lead of the new PM does not want the bailout extension and the ECB are unlikely to agree the current Greek ‘reconsruction’ proposals which include new reforms and a bridging loan.
With huge popular support at home and a mandate to adhere to, Greece doesn’t seem likely at this point to cave in to the ECB and Merkel’s demands.
The best they could do was agree to continue talks on Monday but for now there is still a huge divide.
This may be a long battle and the uncertainty will be a significant market factor.
Inflation and BOE Governor Carney’s Report
Meanwhile in the UK the BOE came forward with an upbeat inflation report and whilst the Governor, Mr. Carney, acknowledged the downside risks in the near term, the mid/long term was looking more secure and inflation will get back on target.
He saw low oil prices as a positive overall for the income and for the potential to increase household income. There were definite hawkish tones against the warning of inflation dipping which the market has come to expect in the environment of lower oil prices. This is not seen as anything but a temporary phenomenon.
All in all a very positive report for the UK and the GBP.
GBP predictably gained strength on the news.
The Antipodes
In Australia very disappointing unemployment numbers (reaching 12 year lows) saw the AUSUSD take another leg down although currently off its lows.
In New Zealnd disappointment with PMI numbers caused a similar effect. Also off its lows it is under more downward pressure.
In the US, the following data has just been received;
Unemployment claims came in at 304K missing expectations, whilst retail sales also missed the mark. This is an inflation number and important in the context of FOMC policy and of course we all know the importance to the Fed of job statistics. The market has reacted but nothing extensive in the data to disturb the underlying fundamentals.
Fundamental Events Still to Watch
Consumer confidence in the US tomorrow and Canadian Manufacturing sales. Some Euro data also but this is somewhat ‘suffocated’ by the Greek situation.
Judith Waker
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