Greece Formally Requests Loan Extension
In the UK, the only notable economic release today is the CBI industrial trend survey which is expected to show that optimism among local manufacturers strengthened for February. Going forward, tomorrow’s retail sales numbers in Britain will be eyed to gauge the health of consumer spending last month, especially after UK’s core inflation ticked up unexpectedly for January.
Across the Atlantic, the latest FOMC minutes revealed that some officials were concerned about an early interest rate rise in the nation. In the Euro zone, the ECB approved Greece’s request to extend its financial assistance to the country’s banks for a short term, thereby temporarily easing concerns about a Greek exit. Meanwhile, media reports indicate that Greece has formally requested for a loan extension.
Pound Sterling – UK Markets
This morning, Sterling is trading in a tight range against the greenback ahead of February’s CBI industrial trend survey which is anticipated to show an improvement in morale among UK manufacturers. Considering that the ECB is expected to unleash its massive stimulus programme next month and boost demand in the Euro zone, confidence among UK producers is anticipated to remain buoyed on the external front.
Yesterday, the Pound gained ground against the majors following the release of the upbeat UK labour market survey. The report revealed that hiring pace in the nation was stronger than anticipated for the three months ended December which surprisingly bought down Britain’s unemployment rate to 5.7%, its lowest level since August 2008. Additionally, domestic wages grew at a healthier pace for the last quarter of 2014, thereby offering another evidence that the spare capacity in UK’s labour market is reducing. Separately, the minutes of the BoE’s most recent policy meeting showed signs of division among officials over the outlook towards the timing of an interest rate rise in the UK, despite unanimity on the central bank’s current policy stance.
US Dollar – US Markets
The greenback retreated against its peers in yesterday’s trading session, reversing its earlier gains soon after the release of the minutes of the US Federal Reserve’s recent monetary policy meeting. Minutes indicated that some policymakers were concerned that premature rate increases might hamper economic recovery in the US. It also signaled that Fed officials are worried about low inflation and external factors that could possibly have an impact on the nation’s economy. On the macro front, data released yesterday further fuelled prospects of the Fed leaving its policy stance unaltered in the near term. Producer price inflation in the US registered a steep decline for January on the back of plunging oil prices, while core prices inched down modestly, increasing the risk of persistent disinflation in the overall economy. In separate reports, US building permits declined unexpectedly, while industrial production expanded at a slower than expected pace in January.
The US Dollar is trading lower against its key peers this morning, ahead of the release of the Philadelphia Fed’s survey on the manufacturing conditions in the regional economy, due later today.
Euro – European Markets
The Euro firmed against the majors yesterday amid optimism that Greece’s newly elected government would agree on a debt deal with its international creditors. Despite the logjam, the Greek Finance Minister indicated that the deadlock could be broken by the end of the week. An agreement on Greece might help the Euro sustain its current gains. Meanwhile, on expected lines, the ECB raised its emergency funding to Greek banks. In the absence of any major economic releases from the Euro zone and amid media reports indicating that Greece has formally requested for a loan extension, developments on debt negotiations between Greek officials and their EU counterparts will continue to have a major bearing on the currency markets during the upcoming trading sessions.
The Euro has maintained its gains against the US Dollar this morning. Meanwhile, the preliminary consumer confidence data from the Euro zone today is set to offer insights about consumer morale in the region following mostly encouraging signs about the economy in February.
Other Currencies – Highlights
The Swiss Franc is trading in a tight range against the greenback this morning, with the US Dollar attempting to regain lost ground following yesterday’s dovish FOMC minutes. The US Dollar has been gradually extending gains against the Swiss Franc after the sharp gains the Swiss Franc recorded following the Swiss National Bank’s (SNB) removal of the cap against the Euro in a sudden move last month. Meanwhile, the SNB President Thomas Jordan, on Tuesday, remarked on the overvaluation of the Swiss Franc and hinted that the central bank would intervene if necessary.
Data released earlier today revealed that trade surplus in Switzerland widened more than anticipated for January. Meanwhile, yesterday’s ZEW survey report for the nation indicated a sharp drop in investor sentiment. This sharp fall in sentiment could be attributed to the SNB’s move last month which resulted in a sharp appreciation in the nation’s currency.