ECB’s Liquidity Drive
Wed, 29 Feb 12 11:12 am
All eyes are fixed on the outcome of the second Long Term Refinancing Operation (LTRO) by the ECB due later today wherein market expects a take up of about €500 billion by the region’s banks. However, with the puzzle lying in determining the quantum of allotment which can be termed as “good” or “bad”, market believes that more the liquidity the better it is for the Euro. Across the Atlantic today, markets keenly await GDP data and Bernanke’s testimony. At home, following unchanged consumer confidence data released earlier today, data just released indicates that mortgage approvals and consumer credit rose for January.
LTRO Boost
Tue, 28 Feb 12 10:42 am
Market optimism surrounding the ECB’s upcoming second Long Term Refinancing Organisation (LTRO) facility has convincingly aided the Euro in today’s trading session. Additionally, yesterday’s German lower house approval for the Greek rescue package has further helped trading sentiment. Market seems to have taken the credit rating downgrade of Greece by S&P and concerns emanating from the recent rally in crude oil prices in its stride. Across the Atlantic, durable goods orders and housing data due today are likely to be subdued. At home, markets await the CBI reported sales data for February which is expected to be largely positive.
G-20 Meeting Ends Without Reassurance
Mon, 27 Feb 12 10:33 am
The weekend meeting of G-20 finance ministers ended with discussions surrounding the potential expansion of IMF resources, with non-euro area members demanding more effort from Europe before providing any help. All eyes are now on the ECB’s second 3-year LTRO later this week which is expected to ease funding pressures in the region. With a light economic calendar today, markets are awaiting the outcome of bond auctions across the Eurozone and German lawmakers vote on the second bailout package for Greece later today. At home, data released earlier today indicated that average house prices in the UK remained flat for February
Market Debates Further Stimulus
Fri, 24 Feb 12 10:44 am
Data just released confirms contraction in the British economy for the fourth quarter as expected. This, along with the BoE minutes released earlier this week and supported by committee member Fisher’s dovish comments, has revived hopes of additional stimulus by the BoE. The “risk on” trading sentiment has continued today, with market participants eyeing the Italian bonds auction later today, the outcome of the G-20 meeting during the weekend and next week’s second LTRO operation by the ECB. Risk appetite had gained momentum yesterday, following better-than-expected economic data in Germany and the US. Today, Germany reported GDP figures in line with expectations.
German Data Reinforces Sentiment
Thu, 23 Feb 12 10:26 am
Yesterday’s BoE minutes, which have weighed heavily on the pound, indicated a split in voting on the size of additional asset purchases, fuelling market speculation that the central bank may resort to further easing measures in the future. To compound the sterling/euro position, data just released indicates a better-than-expected improvement in the keenly awaited German IFO business climate index for February. Weak PMI data in the Eurozone, coupled with a Fitch downgrade of Greece, did not have any impact on the Euro yesterday. Markets are now eyeing a heavy economic calendar in the US today for further direction.
BoE Divided on Stimulus Size
Wed, 22 Feb 12 10:55 am
At home, the minutes of the BoE’s latest monetary policy meeting recently released indicate that BoE policy makers were divided on their bond-purchase target. With initial euphoria surrounding the Greek debt deal settling down, the market now seems to be concerned about the implementation of the agreed strict austerity measures in Greece. Data just out indicates that manufacturing PMI in Germany and the Eurozone missed market consensus and is likely to put pressure on the Euro in today’s trading. Across the Atlantic, market participants are eyeing existing home sales data which is expected to show an improvement.
Greece Clinches the Deal
Tue, 21 Feb 12 10:38 am
The much awaited €130 billion bailout package for Greece was finally approved by European finance ministers with strict conditions, including a 53.5% haircut on Greek bonds owned by private investors. However, market concerns that the deal is only a short-term fix has kept gains in the Euro subdued. Meanwhile, markets await the release of the Eurozone’s consumer confidence data for February later today. At home, data just out indicates that public sector net borrowing declined for January. All eyes are now on tomorrow’s release of the BoE’s minutes, which will provide some insight into this month’s voting pattern that led to the additional £50 billion in stimulus.
Countdown to the Greek Deal Begins
Mon, 20 Feb 12 10:39 am
With all eyes fixed on the European finance ministers meeting scheduled later today, market participants expect Eurozone leaders to approve the €130 billion Greek bailout package. Additionally, the monetary policy easing step taken by the Chinese central bank has further helped high yield currencies to gain traction. With a US holiday today and little in terms of economic releases in Europe, markets are likely to takes cues from news on Greece and the scheduled bond auctions in Europe. At home, data released earlier today indicated that house prices for February posted the biggest monthly rise since April 2002.
UK Retail Sales Growth Surprises Markets
Fri, 17 Feb 12 11:05 am
Data just released indicates that retail sales in the UK for January rose 0.9% in compared with December. This has surprised markets, which were expecting to fall of 0.3% and is likely to improve sentiment towards Sterling. Meanwhile, there is renewed optimism that the second bailout for Greece will sail through. Eurozone leaders are now set to meet on Monday to discuss this. Meanwhile, reports indicate that the ECB is set to swap its Greek bonds holdings with new bonds to ensure that it is not forced to take losses in the Greek debt restructuring.
UK Consumers Lead the Way
Thu, 16 Feb 12 10:36 am
Following yesterday’s dismal domestic jobs report, markets have found some solace in the consumer confidence data for January released earlier today, which rose to the highest level in five months. Additionally, the much awaited quarterly inflation report from the BoE portrayed a less dovish picture for the economy, thereby dampening prospects for further stimulus. Moody’s warning on ratings for several European banks, coupled with continued worries over progress on Greece, have further aided to keep Sterling buoyant against the Euro in today’s trading. Meanwhile, French and Spanish bond auctions are on traders’ radar today.
China To The Rescue
Wed, 15 Feb 12 10:40 am
The momentum in today’s trading session has shifted back towards the Euro, on the back of China’s pledge to support the Eurozone in tackling the debt crisis. Meanwhile, European finance ministers have cancelled their meeting due today, citing tepid response to the required austerity measures. However, reports suggest that Greek conservative party leader, Antonis Samaras, may commit to demands from the Troika later today. Following yesterday’s easing inflation data in the UK, all eyes are now set on the BoE’s quarterly inflation report due later today. Data just released indicates that jobless claims rose more-than-expected for January.
Moody’s Strikes
Tue, 14 Feb 12 10:19 am
Moody’s warning that it may cut the “AAA” rating of some European nations, including Britain, coupled with downgrades of six Eurozone countries, has exerted pressure on high yield currencies today. Meanwhile, The Financial Times reported that Germany and other European nations may not be prepared to fully approve the bailout for Greece at the meeting set for tomorrow. This has shifted market focus to tomorrow’s European finance ministers meeting aimed at discussing the bailout package for Greece. At home, following an unchanged RICS house price balance released earlier today, data just out indicates that the annual consumer price inflation index eased for January.
CBI Outlook – A Pleasant Surprise
Mon, 13 Feb 12 11:24 am
Upbeat comments from the Confederation of British Industry (CBI) that domestic economic growth will gather pace in the second half of this year has come as a positive surprise to market participants. However, the new found optimism in the Eurozone, on the back of the much awaited Greek Parliamentary approval for the austerity bill, has tilted the scale in favour of the Euro against the Pound. In the US, Barack Obama’s fiscal 2013 budget proposals to Congress are in focus today, especially with rating agencies raising concerns in recent times over the country’s debt levels.
Greek Storm Rattles Markets
Fri, 10 Feb 12 10:25 am
“Risk-on” trading sentiment has suffered after the European finance ministers stalled the second bailout package for Greece, demanding that the Greek parliament approve the terms of the package of cuts and reforms. This has made the situation difficult for Greece with the Greek Finance Minister, Evangelos Venizelos, indicating that the parliamentary vote set to begin this weekend amounted to a vote on euro membership. Meanwhile, the outcome of yesterday’s monetary policy meeting of both the BoE and the ECB was in line with market expectations. Both central banks kept their benchmark interest rates unchanged, with the BoE announcing an additional £50 billion stimulus.
BoE Stimulus Boost Anticipated
Thu, 09 Feb 12 10:21 am
Markets are gearing up for an action-packed trading session, with key policy meetings of the BoE and the ECB due later today. With interest rates expected to be kept on hold by both the central banks, the BoE is likely to announce an additional £50 billion stimulus. The ECB’s post-meeting press conference will also be closely tracked for hints on further liquidity boosting measures likely to be adopted by Mario Draghi. Turning to Greece, with reports suggesting that an agreement was reached on all but one issue of the proposed austerity plan, markets anticipate a positive outcome on Greek debt talks soon.
UK Retail Outlook Gloomy
Wed, 08 Feb 12 10:38 am
Following yesterday’s weak domestic BRC retail sales data, an update released earlier today indicated that shop price inflation for January eased to almost a two year low. This highlights the dire state of retailers who have kept prices in check to entice cash-strapped customers, and has strengthened market speculation of an additional stimulus by the BoE in the rate setting meeting scheduled for tomorrow. The procrastination in Greek debt talks continues, with another meeting due later today. However, reports suggest that Greece may be close to clinching the second bailout package from the Troika.
Greek Deal Remains Elusive
Tue, 07 Feb 12 10:23 am
The threat of an imminent Greek default looms large, with markets still awaiting the Greek response to demands by the Troika on economic measures. As talks between Greek political parties enter a second day, it is possible that the longer it takes for an agreement to come to fruition, the greater the chances for a disorderly default. In the US, Bernanke’s testimony to the Senate Budget Committee today is likely to have a dovish tone regarding the US economic outlook. At home, data released earlier today indicated that BRC like-for-like retail sales posted a very poor January performance.
Greek See-Saw Continues
Mon, 06 Feb 12 10:30 am
Greek debt worries fail to die, as market participants eye the response of key leaders of Greek political parties to demands by international creditors on economic measures. The ongoing tussle in Greek debt talks, coupled with recent strong UK PMI and confidence numbers, have turned the tide in favour of the Pound against the Euro. The robust UK data has made the call for additional stimulus a little trickier for the BoE at its scheduled rate setting meeting on Thursday. Across the Atlantic, markets were positively surprised by the release of upbeat jobs data on Friday.
Greek Deal and US Payroll
Fri, 03 Feb 12 10:18 am
The struggle between the Greek government and private bondholders to reach an accord on a debt-swap deal has prompted traders to remain risk averse. With a light European economic calendar today, market participants will continue to eye Greek talks wherein a decision is likely to be delivered on the weekend. Across the Atlantic, markets are focused on non-farm payrolls data due today to gauge the sustainability of the economic recovery. In the UK, data just released indicates that services PMI unexpectedly improved for January. This comes on the back of the Lloyds business barometer, released earlier today, showed a significant improvement for January.
Markets Take a Breather
Thu, 02 Feb 12 10:27 am
Yesterday’s trading session witnessed decent gains in high yield currencies on the back of strong manufacturing data in China, Europe and the US. However, markets seem to be anxious today on lingering Eurozone debt fears, primarily due to an elusive Greek debt-swap deal and Spanish and French bond auctions due later today. At home, yesterday’s strong manufacturing data helped in allaying fears of an uneven economic recovery to an extent. Data just released indicates that the British construction PMI declined more-than-expected for January.
Greek Marathon Talks Continue
Wed, 01 Feb 12 10:39 am
The persistent delay in Greek debt swap negotiations has kept traders on the edge with risk appetite being broadly muted. Reassuring comments by the Greek Prime Minister that he is trying for a successful debt deal by the end of this week has failed to enthuse market participants. However, Markets seem to be buoyed from data released this morning which indicated an improvement in manufacturing activity across the Eurozone. At home, data just released revealed that manufacturing PMI improved in January. However, house prices continue to decline and there was a record drop in consumer credit in December.
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