A strong reading from the UK services Purchasing Managers Index (PMI) did not disappoint the markets following a robust manufacturing reading earlier in the week. The index jumped to a 10-month high of 56, crossing the expansion/contraction marker of 50. This reading indicates a return to growth for services this year after a flat 2011. This surprisingly upbeat news will focus the market’s attention on the next Monetary Policy Committee (MPC) meeting on Thursday when an announcement on additional quantitative easing is expected.
Talks to resolve the pressing issue of restructuring the privately held debt by Greece remain very slow and appear to no longer go ahead until there is no enough guarantees that Athens can implement more severe austerity reforms. Greece is getting ever closer to bankruptcy unless it can secure a second financing package from the euro zone and the IMF. In fact the Greek’s need to agree something today in order to avoid a delay in the next tranche of support.
In the US a strong payrolls report was well received, this has led to a decrease in the ‘safe haven’ factor and actually weakened the USD.
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