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Spotlight back on Greece

  • UK Retail Sales m/m: 0.2%
  • EUR Targeted LTRO: 73.8B
  • Eurogroup meetings
  • US CPI m/m: 0.4%
  • US Core CPI m/m: 0.1%
  • US Unemployment Claims: 267k
  • US Philly Fed Manufacturing Index: 15.2

Greece are firmly in the spotlight again after a meeting of finance ministers yesterday failed to make a breakthrough on the debt crisis.  With International Money Fund (IMF) boss Christine Lagarde stating that there is "no period of grace" for Greece over a debt repayment deadline. Lagarde said Greece would be in default on its loans from the IMF if it failed to make a €1.6bn (£1.1bn; $1.8bn) at the end of the month. The situation continues to weigh on sentiment and is fast approaching crunch time. As a default is becoming ever more prominent, an emergency meeting has been called on for Monday, as fears that massive outflows of funds may prevent Greek banks opening next week.

The US Dollar continued to weaken as the market continued to decipher the commentary from Wednesday nights FOMC meeting. The US Dollar will now be very sensitive to data with the debate focusing on whether or not we will see a rate hike in September.

Meanwhile, data from the UK continued to impress. UK retail sales posted a better than expected figure, but this was a slowdown from the rise in April, after shoppers bought fewer clothes. Compared with the year before, retail sales rose 4.6%, which the ONS said was the 26th consecutive month of year-on-year growth. This keeps speculation of an early rate hike at the front of the minds of market participants. BoE member Forbes, speaking after Wednesday’s minutes said she expected a rate hike in the “not too distant future”.

  • BOJ Press Conference
  • UK Public Sector Net Borrowing
  • CAD Core CPI m/m
  • CAD Core Retail Sales m/m

Looking to the day ahead, the economic calendar is fairly quiet, however it is also quadruple witching today. Quadruple witching happens once a quarter when market index futures, market index options, stock options and stock futures expire, usually resulting in increased volatility. This can and has spilt over into the currency markets in the past. In addition, the European Finance Ministers meeting in Brussels will take place.