Once again the Greek tragedy continued to dominate the headlines last week. With intense meetings and negations over the weekend, it appears that a agreement has been reached in principle between Greece and it creditors. EU chairman Donald Tusk said leaders agreed "in principle" on negotiations for the bailout. Greece will now have to pass reforms demanded by the Eurozone by Wednesday. The recent Greek referendum adds complications to whether Greece will be able to pass the deal through parliament. German Chancellor Angela Merkel said on Monday morning "the road will be long and judging by the negotiations tonight, difficult". Whilst a Grexit may have been averted in the short term, there are still several hurdles ahead.
Newswires surrounding Greece will continue the dominate the headlines with further comments from the Eurogroup meeting. In addition, the BoE Credit Conditions Survey will give details on secured and unsecured lending to households, small businesses, non-financial corporations and non-bank financial firms.
Top tier data is expected from the UK, US and Eurozone which may add as a distraction from the ongoing problems in Greece. In the morning, the focus will be on the UK with the inflation reading in focus. This will be followed by the Inflation Report where BOE Governor and several MPC members testify on inflation and the economic outlook before Parliament's Treasury Committee. Given the recent focus on interest rates this will be key for clues about the timing of the first rate hike in the UK. Also on the docket are the key ZEW (institutional investors and analysts view) from both the Eurozone and Germany, whilst the US retail sales will dominate in the afternoon.
The Greek deadline for a decision looms and the headlines will be focused on this. However, deadlines have been missed on several occasions now so there is every chance this will be extended once again. Meanwhile, there is key data from the UK with the Ave earnings and unemployment numbers. Crossing the pond, the US has the producer price index and Empire manufacturing data due for release. However, the focus will be on FOMC Chair Yellen who is due to testify on the Semi-annual Monetary Policy Report before the House Financial Services Committee, in Washington DC.
Dependent on the outcome for Greece will dictate the tone of the ECB press conference this afternoon. It is expected that the ECB will keep rates on hold but the tone of Draghi will be key after the intense situation with Greece. Meanwhile FOMC Chair Yellen continues her testimony in Washington.
The attention will be on US data today as the market continues to procrastinate over the timing of “lift off”. Positive data will only strengthen the case for an early hike.