Greece has activated Collective Action Clauses (CACs) after 85.8% of private creditors accepted the Greek bond swap offer. This has shifted focus to the International Swaps & Derivatives Association (ISDA) meeting due later today to decide whether a credit event has occurred. Across the Atlantic, non-farm payrolls data is in spotlight today.
Domestically, data just released, indicates that the monthly industrial production for January fell compared to December, while input and output producer price inflation indices for February rose more-than-expected. Meanwhile, the outcome of yesterday’s policy meetings of the BoE and the ECB were in line with market expectations.
Pound Sterling – UK Markets
The Pound has weakended against the US Dollar as traders remain cautious ahead of the outcome of the ISDA meeting about the Greek debt-swap deal.
The BoE, in its monetary policy meeting yesterday, maintained its benchmark interest rates at record low levels and left its asset purchase target unchanged at £325 billion, matching market estimates. The minutes of the meeting due later this month will be of substantial interest to investors for hints on further asset purchases later this year.
Data just released shows that UK’s monthly industrial production for January fell compared to December, while input and output producer price inflation indices for February rose more than expected.
Sterling is likely to track headlines emanating from Greece and crucial US jobs data for further cues.
US Dollar – US Markets
The US Dollar has strengthened against the majors this morning amid concerns that Greece’s use of CACs might trigger payment of credit-default swaps. Additionally, data released earlier today indicated that Chinese industrial production and retail sales growth slowed for February.
Yesterday, the US Dollar suffered losses against the majors, amid optimism that Greece may be able to eventually avoid a disorderly default.
Data indicating an unexpected rise in initial jobless claims yesterday led to worries about the US labour market. Against this backdrop, investors keenly await the release of non-farm payrolls for February later today which is anticipated to indicate additions of 210K jobs, with the unemployment rate expected to remain unchanged at 8.3%. Additionally, trade balance data is also on the radar today.
Euro – European Markets
The Euro has reversed its initial session gains and is trading lower against the US Dollar after Greece indicated that it has activated the CACs to achieve its target of 95.7% participation rate. The move has sparked concerns that CACs might trigger the payment of credit-default swaps.
Yesterday, the Euro moved higher against the US Dollar after the ECB held its interest rate at 1% and President, Mario Draghi, signaled an eventual exit from record-low interest rates and emergency lending measures. He affirmed that the Long Term Refinancing Operations had proved to be an "unquestionable success" and had led to enormous improvement in the risk environment.
Data released today showed that German consumer price inflation stabilised for February, while exports rebounded for January.
The Euro is widely expected to track the outcome of the ISDA meeting on Greece slated later today.
Other Currencies – Highlights
The Aussie Dollar is trading lower against the US Dollar amid concerns surrounding the Australian economy. Data released earlier today indicated that Australia posted an unexpected trade deficit for the first time in eleven months amid the biggest drop in total exports in almost three years. This comes on the back of yesterday’s data indicating that Australian unemployment rate rose to 5.2%, with majority of the firms axing jobs due to sustained strength in the currency and weak consumer confidence.
Lower-than-expected Chinese industrial production and retail sales data for February further weighed on trading sentiment towards the Aussie Dollar.
News updates on Greek debt are poised to determine trading sentiment for the day.
Markets Turn Choppy Ahead of Key Data
British Pound Extends Slide as Cross-Party Talks Collapse