Greek aid package “absurd”?
The GBP on Friday had a bit of a rollercoaster ride. We talked about it being a potentially volatile day and the market did not disappoint. It was again a tale of two currencies. The GBP lost more than a cent against the USD in the morning before recovering some ground, but overall closed the day having still lost around a cent. Against the EUR, the GBP lost ground sharply too, but recovered quickly and actually finished the day higher than where it started. In both cases the movements were rapid and driven by economic news.
Early on Friday were the House Price Indexes, which can be a key indicator for inflationary pressure. These came in slightly higher than the last release (three months ago) and was released side by side with a survey of consumer inflation expectations, which was comfortably higher than the last release of this kind too. So, overall some solid figures for the inflation expectations of the UK. However, the effect on the market was muted.
The US Nonfarm Payrolls produced a very strong figure of +280k – this is the difference in the number of people on the payroll of businesses that are not in the agricultural industry. At the same time, however, the US unemployment figures returned a worse figure by increasing to 5.5% from 5.4%, and the last part of the puzzle was the Average Hourly Earnings figures which came in positive. So, more people on the payroll for non-agricultural jobs and higher average earnings are both good. The size of the gain in the Nonfarm data will no doubt add weight to growth discussions for the US economy. I have read that some analysts began speaking of even two possible interest rate rises for the States this year.
Greece delayed their due EUR 300 million repayment to the IMF on Friday as well, which is a move that didn’t really garner a great deal of surprise. No punitive action can be taken against Greece for such a delay, effectively meaning that the creditors extend a line to them for a 30 day period and it would have been churlish for Greece not to have occupied the leniency. The Greek Prime Minister, Alexis Tsipras, gave a speech on Friday which roundly rejected the (his words) “absurd” proposals for aid from lenders. It is possible that the speech was aimed at rallying support for his action in delaying the repayments.
Today there is less of the economic data that has pushed and pulled currency values during, particularly, the latter half of last week. Of course, the G7 summit is in session and of course this is critical due to timing and the nature of the discussions to be had. We have a range of German data, including Trade Balance and Industrial Production and then the rest of the day is a bit quieter.