Yesterday, Greece’s referendum saw the people win a 61% majority of a No vote, thus rejecting a deal with its creditors that would have meant further austerity. After the vote was confirmed, Greek Prime Minister Alexis Tsipras said the Greeks made a “brave choice” in voting to reject the terms of an international bailout and now with the firm backing of the people, Alexis Tsipras will return to the negotiating table with its creditors. However, this no vote has been seen by many Eurozone members as a rejection and has torn down bridges between Athens and Europe. Jeroen Dijsselbloem, who heads the single currency zones finance ministers, said that the no vote result was “very regrettable” for the future of Greece. The Greek result saw the Euro fall against a basket of currencies, but gains for the Euro were seen this morning against the greenback as news of Greek Finance Minister Yanis Varoufaki resignation filtered through. Volatility will remain for the single currency as markets digest yesterday’s result and further statements from both sides on the future path of Greece are released.
The market will be solely focused on the news headline surrounding the Greek debt crisis. The market will be fickle and will react quickly on breaking news before deciphering the longer term implication. On the data front we have US ISM non-manufacturing PMI, the US’s largest sector, a bullish number here could spur the Fed to going through with a September rate rise.
UK manufacturing production will dominate the morning’s session whilst focus switches to the US trade balance in the afternoon. High tier data as mentioned will continue to be heavily monitored by markets as economists’ try to gain insight into the Federal Reserve’s and the Bank of England’s interest rate plans.
The busiest day of the week sees UK politics dominate the day session whilst focus switches to the US central bank in the evening. Wednesday’s budget has been claimed by Chancellor George Osborne to have “laser like focus” in regards to productivity and living standards. In the evening, the FOMC release their latest meeting minutes where markets will be fixated on any signaling device or commentary from the Fed. After the mixed jobs data last Thursday, a September rate rise still remains the market favourite, however all could change after this release.
The Bank of England take the spotlight today with the release of the asset purchase facility and interest rate decision, a MPC rate statement released shortly after is tentative. No change is expected to the UK’s record low rates of 0.5% and QE program. Markets will still focus heavily on the announcement and if any statement is to follow we should see Sterling volatility occur. Currently the robust consumer activity and strong housing market activity does suggest that a rate hike early 2016 could occur, however this will remain very data dependent. The weekly jobless claims figure from the US is released this afternoon, where economists’ will be watching to see if this can bounce back from last week’s poor number.
Fairly quiet back end of the week, but there will be focus on the UK as the release of the UK’s imports and exports are due.