Strike three for Greece?
Please can we have some more? After receiving two bailout packages from the troika (ECB, EU and IMF) already, Greece are needing a third and around €7bn. Greek PM Alexis Tsipras is asking for a further bailout package as major repayments are due later this year, with the first debt repayment due to its creditors in July. The IMF are taking the stance that Greece will not grow out of the debt problem and therefore are not willing to agree to providing additional funds. Although not critical just yet, it is felt that an agreement is needed quickly as the political background of the European Union could change, with French, German and possibly Italian elections this year. To tie in with this, Greece have not confirmed to the reforms asked of them after receiving the previous two bailout packages. The fundamental question that needs to be addressed is whether Greece should receive further funds in their current situation, with repayment looking very unlikely.
UK inflation is anticipated to show another jump up and is expected to hit 1.9%, just under the BoE’s target of 2%. If recent data releases from Britain are an indication, the CPI gauge could be well above their target, which could mean volatility for Sterling. Shortly after, the second reading of Q4 GDP from the Eurozone will be released and is due to be the same as the previous reading of 0.5%. In the US, in the afternoon, the focus will be on Fed Chair Janet Yellen, who will be speaking before the Senate Banking Committee in Washington. As always, markets will look to decipher her remarks for clues as to the next action the Fed may take and when.
An insight into the UK’s labour market will be in focus in the morning, with Average Earnings and the Unemployment Rate both expected to remain in line with last month’s figures. The only change due to be seen is the amount of people claiming benefits, which is set to increase by 1.1k. The States then takes center stage for the rest of the day as their monthly inflation gauge is posted, along with the monthly Retail Sales. Consumer spending is set to fall from the previous reading of 0.6% to 0.1% which could have a negative impact on the Dollar. Janet Yellen will also testify again in Washington, similar to Tuesday’s events.
Data will start to slow down towards the end of the week, with very little hitting the wires on Thursday. The only data of note due for release will come from the US with Building Permits and the Philly Fed Manufacturing Index being posted. Although considered high tier information, there is rarely any volatility for the Greenback as a consequence. Also due for release on Thursday are the latest accounts from the ECB’s last board meeting.
The week will finish with the release of the monthly UK Retail Sales figure. The last figure showed consumer spending fall to 1.9%. If there is a more positive outlook this month, it could spur confidence into the Pound. Likewise, another poor posting could see Sterling end the week on the back foot.