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Now The Troubles Really Start…

Now The Troubles Really Start…

Good morning and somehow we have found ourselves in March. With the bailout having been agreed and the Greeks happily kicking the can down the road, the attention has switched from short-term to long-term thinking with people now starting to look at the actual state of the economy as opposed to the fear of a Grexit. The markets seem to have realised that the bailout has not actually resolved any fundamental issues with the Greek economy and are now wondering what will happen next.

The Greek banking system remains perilous, and with Greek FM Varoufakis insisting that the Greeks “shall squeeze blood out of stone” this doesn’t bode too well for the future. The economy needs to reboot and even though the Troika is now seemingly dead, the reality is that it is just the name that has bitten the dust as the EC, ECB and IMF are still very much alive and kicking and breathing down the Greek necks.

With QE being implemented this month, we should see further declines in the Euro. The first predictions of parity against the US Dollar for the first time since 2002 have been made and whilst we have already seen a 7% slump against the US Dollar this year, this could well continue. We should see further explanation of how QE is going to work this week. The depreciation of the single currency is beneficial for the Eurozone as it aids faster inflation and more competitive export prices.

In the UK, we are expecting to see a decline for February’s PMI number although this should be only slight.

Elsewhere, the Bank of China cut its interest rates for the second time in three months amid concerns over growth and low inflation. This could be a cause for worry due to the significance of China in the global market.

There is a lot of focus on Australia as their rate decision is announced tomorrow and a further rate cut is being mooted on the back of last month’s first cut since July 2007. Unemployment is causing headaches for the RBA so expect a great deal of volatility.

Today, we have PMIs from Germany, Eurozone, US and the UK. We also have consumer credit and mortgage approvals from the UK.

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