RIOTS IN GREECE, EURO TO FALL?
Throughout yesterday, the week’s momentum was maintained which resulted in the second consecutive day of losses for the Dollar. Dollar bulls, however, won’t be too worried, not even after witnessing the breach of what was considered a key psychological level versus Sterling. It seems that each time USD concedes some value versus its most traded counterparts, it takes it back soon afterwards.
The resilience of the Greenback seems reliable right now with speculation surrounding an interest rate hike next month keeping it well supported. There is still potential for marginal Dollar weakness in the near term, however, most market participants expect this to be short lived as we head into the festive period.
On the data front, despite far better than expected employment data from the US last week, we did witness some slightly underwhelming figures yesterday with both initial and continuing jobless claims coming out worse than the market consensus . Today, we have top tier data in the form of retail sales from the US to close the week.
The Euro has remained unexciting this week, struggling to find any direction with the lack of data released. Even Mario Draghi’s two day speech did little to cause much movement in single currency as it would seem much of the Central Bank’s possible moves have been priced in by the markets for now. If anything, the Euro gained a little strength against both Sterling and the Dollar as FED Chair, Janet Yellen gave no clues on the date of a probable rate hike yesterday.
With warnings shots having been fired for months now, Greece is working its way back into the headlines. Yesterday there were riots in Athens when news broke that creditors are currently withholding the next tranche of Greece’s bailout due to disputes over how the Greek government has implemented the necessary measures. One of the reforms which sparked outrage from the Greek public was the news that Eurozone finance ministers are urging Greek Prime Minister, Alexis Tsipras, to grant Greek lenders more power to repossess homes to settle debts.
Today we have a key release from the Eurozone in the form of real time GDP figures. With German growth barely meeting the market consensus this morning, there are some worries that the Eurozone figure will suffer a similar fate or come up short.
The Bank of England’s chief economist Andy Haldane has said Britain does not need an interest rate hike in the near future because wage growth has fizzled out and the outlook for the global economy is uncertain. Haldane has previously warned that the world economy might be heading into a new crisis caused by slower growth in emerging markets.
British house price growth accelerated in October, fuelled once again by a shortage of new homes coming to the market. Property is set to become more unaffordable going forward, based on five-year projections from members of The Royal Institution of Chartered Surveyors for house prices and rent. The Bank of England has said that, if necessary, it would first seek to dampen the housing market with regulatory tools before raising interest rates.