Euro money and credit data on Thursday

Market movers today

• Markets will be digesting the results of the Greek election.

• On the data front focus turns to the German Ifo index for January. We look for a stronger-than-expected increase to 106.8 (consensus 106.3) from 105.5 in December. The expectations index, which is the most leading part of the Ifo index, is also expected to beat expectations. Our positive view is based on a strong rise in ZEW, which has been a good leading indicator for Ifo and the German economy as a whole. ZEW rose strongly in January for the second month in a row. The rise in sentiment is underpinned by new tailwinds from the rapid decline in the oil price and the sharp weakening of the euro. The sentiment hit from the Ukraine crisis is also fading.

• Focus is set to turn to the FOMC meeting on Wednesday, Euro money and credit data on Thursday and US GDP data for Q4.

• No Scandi events scheduled for today but watch out for EUR/DKK and Nationalbanken.

Selected market news

The fallout from the Greek election will take centre stage. With the anti-austerity leftist Syriza party headed for a greater victory than suggested by polls, yet likely set to fall short of assuming absolute majority, an anti-bailout coalition will probably be formed. As a result, markets will stay alert to any hints regarding the possible stance of a possible new Greek government against its European partners and this could steer volatility in the days ahead. A clear victory for Syriza is from a market perspective a slight negative, but the fact that Syriza is going for a broader alliance is countering this. Once Syriza’s leader, Tsipras, has managed to form a government, the negotiations with the Troika on Greece’s funding will commence; these are likely to run for a couple of months. Thus Greek uncertainty could be lingering for sometime still and sour sentiment. Notably, EUR/USD has dropped further to now trade below 1.12.

Separately, Bank of Japan (BoJ) governor Kuroda said on Friday in Davos that the BoJ may have to be creative if low inflation depresses inflation expectations further. This has fuelled speculation that the BoJ may want to extend its asset-purchase programme to derivatives and/or regional bonds. BoJ minutes overnight did not shed much light on this issue, however. USD/JPY remains just above the 117.5 mark. We expect BoJ to be done with easing for now.

Stock markets mixed in both the US and Asian sessions and the oil price lower as risk appetite generally abates somewhat due to the political situation in Greece following an otherwise strong end to last week on ECB QE.