Central Bank comments paint the picture whilst Greece gets more assistance

Yesterday’s markets

17th July 2015

  • Eurogroup Meetings
  • EUR Minimum Bid Rate: 0.05%
  • ECB Press Conference
  • US Unemployment Claims: 281K
  • Fed Chair Yellen Testifies
  • US Philly Fed Manufacturing Index: 5.7

It was no surprise that the main news was dominated by Greece after the Greek parliament voted through the first tranche of measures needed to progress further funding. Overnight the ECB announced a €900m increase in ELA to help the Greek banks. This is less than the Bank of Greece requested but it is enough to capitalize the banks for a further week. Meanwhile, Euro area Finance Ministers have agreed in principle to a €7bn bridge loan, allowing Greece to repay a €3.5bn payment due to the ECB this coming Monday.The resulting price action was GBPEUR reaching its highest level since 2007, whilst gauge of the dollar rose to a three-month high against its major peers.

In other news, BoE Gov Carney, FOMC Chair Yellen and ECB President Draghi all spoke on separate occasions and painted the picture of potential future central bank policy. BoE Governor Mark Carney told a London audience that “in my view, the decision as to when to start such a process of adjustment will likely come into sharper relief around the turn of this year”. However, he went on to say that economic shocks could change this timetable. FOMC Chairwoman Yellen reiterated her comments from the previous day that the US is on course for a rate hike this year. Meanwhile, ECB President Draghi’s commentary firmed up the central bank’s commitment to QE.

Looking at the data released during the day, the US initial jobless claims fall back 16k to 281k last week which is another positive for the economy. However, less impressive was the Philadelphia Fed’s headline business conditions index which fell considerably. 

Today’s markets

16th July 2015

  • CAD Core CPI m/m
  • US Building Permits
  • US CPI m/m
  • US Core CPI m/m
  • US Housing Starts
  • Prelim UoM Consumer Sentiment

On the docket today, during European hours the Bundestag will vote on a Government proposal and begin talks on a new ESM programme for Greece. In the US we will receive the June inflation numbers which is expected to increase 1.8%. Meanwhile the US housing starts and permits and the first reading of the University of Michigan consumer survey for July will be released today.