Greeks and Eurozone Continue To Play Poker
Good morning and welcome to another week. The focus remains much the same as it has for the past few weeks, although we have a few interesting bits of data for the markets to digest.
As it seems a constant theme at the moment, we shall start with Greece. We were greeted with the unsurprising news over the weekend that the Greek National Bank CEO and Chairman have handed in their resignations and are stepping down in the next few days. After last week failed to produce any results between the Greeks and Eurozone, we start another high-stakes poker game this week. PM Tsipras has started off on the front foot with a reaffirmation that he is going to increase the minimum wage, restore the income tax-free threshold and halt infrastructure privatizations. There has been silence from the Eurozone, awaiting the start of meetings on Wednesday, who will probably listen to what the Greeks are saying and then insist that this monetary union is not for turning.
Friday saw the release of much better than expected NFP from the US. There was a much larger increase in jobs added which was up 257k as opposed to the expected 229k. US average hourly earnings rose 0.5% as opposed to 0.3%.This was warmly received by the markets.
Another economy under pressure at the moment is Denmark which last week saw a rate cut for the fourth time in 3 weeks, down to -0.75%. The pressure is mounting on their peg to the Euro, but they have been standing firm and insisting that the Danish National Bank is committed to maintaining the fixed exchange rate policy and has unlimited ammunition to do so.
The main focus for the UK this week is the quarterly inflation report. This has been used as the primary vehicle for announcing policy and outlook changes over recent years. We have seen further evidence of the sensitivity of the UK economy to what is happening with the Eurozone as even though UK exports are growing, 48% of exports are Eurozone bound.
Today is relatively quiet data-wise although we have a G20 meeting, Merkel meeting Obama and more labour market data from the US.