Last week, we continued to see Greece failing to agree or come close to agreeing with its creditors. As it gets closer to the end of the month, the interest still remains on if Athens can negotiate with the IMF and EU on new reforms acceptable on both sides, in order to obtain the last tranch of bailout funds from the IMF. As this continues to hang in the balance, a Greece default is becoming ever more likely and volatility will remain for the Euro until a concrete resolution is found. More positive data was seen from the US mainly in the form of the retail sales figure. Although possibly too late for a rate increase to be seen this month, it is starting to show a shift in the US and a pick up in the data after a poor start in Q1.
A quiet start to the week as the main interest of the markets today will be on ECB president Mario Draghi, as he speaks before the European and Monetary affairs committee on monetary policy. Talking in Brussels, the Euro could see some volatility as Mr. Draghi comments on the outlook of the economy of the single currency zone. From the US the release of their monthly Industrial production figure is posted.
Markets will focus on the UK’s inflation figure released tomorrow morning, as it currently stands in deflationary territory of -0.1% expectations are for it to return back to a positive number of 0.1%, which could see some support for the Pound. Also from Germany the ZEW Economic Sentiment is released and with the powerhouse of the Eurozone showing signs of a slowdown this is also set to follow the same trend. In the afternoon the US post their building permits number.
The FOMC release their latest policy statement followed by a Janet Yellen led press conference. Markets will be closely monitoring officials language to gain an insight into when the Fed will raise interest rates. We expect a batch of revised forecasts for economic growth, the labour market and inflation from the Fed as well.
The BoE releases the minutes of June’s Monetary policy meeting. The meeting was as markets expected with no change in the Central Banks benchmark rate and QE programme. In May nine members voted unanimously to keep rates at record lows of 0.5% with two members citing that their decision was “finely balanced”, have these two members voted yes this time round? UK unemployment rate is forecast to remain sticky at 5.5%. Unemployment rate is an important signal of overall economic health as it is directly correlated with consumer spending, the UK’s main driver of growth.
Euro-region finance ministers gather in Luxembourg with Greece’s bid for financial aid coming down to the wire, will a negotiation finally be met between the two parties this week? UK retail sales on the data front will dominate headlines in the morning while US CPI and Philly Fed will no doubt inject volatility into the market Thursday afternoon.
Non-euro region European finance chiefs join ministers from the currency bloc for the second day of their meeting on Greece, any news from day 2 of this meeting will inject volatility into the Euro as the Greek deal goes down to the wire. German PPI is also scheduled for release, with the inflation figure forecast to improve slightly to 0.2%.