Market Brief
Greece failed deliver on yet another deadline yesterday, leaving bailout talks and bond swap negotiations still without an official conclusion. However, markets appear to have given Greece the benefit of the doubt that discussions are entering their final stages, and that an announcement could be forthcoming after today’s Eurogroup meeting. Looking at the price action from the euro (now trading above 1.3300 levels against the dollar), it is clear that most of the good news is priced in; we are therefore wary that sentiment could deteriorate quickly if a resolution does not materialize by the end of the day.
Coming up today, the Bank of England holds its latest monetary policy meeting and speculation is rife that the MPC will inject at least another GBP50bn of quantitative easing into the UK economy while keeping rates on hold at 0.50%. The decision to pursue further asset purchases will have been made much easier by the recent downturn in UK CPI (from an eye-watering peak of 5.2% YoY in September to a more manageable 4.2% in December), and the fact that the last programme of asset purchases will be coming to an end imminently. Recent PMI data out of the UK has been encouraging, but it is still too early for the central bank to feel confident that Britain will dodge a recession this year. Therefore, we feel it is highly likely that the committee proceeds with another round of asset purchases – and in turn expect the easing move to put downward pressure on the GBP.
Shortly after the BoE’s announcement, the ECB will reveal its latest monetary policy decision; where the European central bank is expected to keep rates unchanged at 1.00%. The ECB has been extremely proactive in recent months to loosen monetary policy as the Eurozone has suffered downgrades to its outlook and markets have wrangled with a crisis of confidence, so for now it seems realistic that the governing council will wait and assess the impact of their latest actions before voting for more. Once again we expect President Draghi to be peppered with questions about Greece’s viability in the Eurozone during his press conference, as well as what other easing measures may be on the cards in the near future.
Also on tap today will be UK industrial production figures for December, US jobless claims data, and US wholesale inventories.
| Global Indexes | Current Level | % Change |
| Nikkei 225 Index | 9'002.24 | - 0.15 |
| Hang Seng Index | 21'049.95 | + 0.15 |
| Shanghai Index | 2'349.59 | + 0.09 |
| FTSE 100 Index | 5'875.93 | - 0.24 |
| DAX Index | 6'748.76 | - 0.08 |
| SMI Index | 6'155.86 | - 0.03 |
| S&P future | 1'346.70 | - 0.02 |
| World Markets | Current Level | % Change |
| Gold | 1'736.03 | + 0.16 |
| Silver | 33.97 | - 0.01 |
| VIX | 18.16 | + 2.89 |
| Crude wti | 99.14 | + 0.44 |
| USD Index | 78.47 | - 0.35 |
| Todays Calender | Estimates | Previous | Country / GMT |
| Industrial output, % m/m (y/y) Dec | 0.2 (-3.1) | -0.6(-3.1) | GBP/09:30 |
| BoE Bank rate decision, % Feb | 0.50 | 0.50 | GBP/12:00 |
| BoE Asset purchase decision, £bn Feb | 325 | 275 | GBP/12:00 |
| ECB Interest rate announcement, % Feb | 1.00 | 1.00 | EUR/12:45 |
| Initial jobless claims, k 04-Feb | 370 | 367 | USD/13:30 |
| Wholesale inventories, % m/m Dec | 0.4 | 0.1 | USD/15:00 |
Currency Tech
EURUSD
R 2: 1.3550
R 1: 1.3460
CURRENT: 1.3295
S 1: 1.3215
S 2: 1.3090
GBPUSD
R 2: 1.6095
R 1: 1.5930
CURRENT: 1.5835
S 1: 1.5790
S 2: 1.5730
USDJPY
R 2: 80.25
R 1: 78.30
CURRENT: 77.20
S 1: 76.50
S 2: 76.05
AUDUSD
R 2: 1.1005
R 1: 1.0845
CURRENT: 1.0815
S 1: 1.0740
S 2: 1.0700
- S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot
