New Greek cabinet announced as eurozone CPI data comes into focus

United States Dollar:

The first estimate of UK Q4 GDP was released yesterday with both the quarterly and annual figures undershooting market expectations. The quarterly reading printed 0.5%, a little lower than the 0.6% consensus, with 2014’s annual reading printing 2.7% when 2.8% was expected.
Expansion for the Oct-Dec quarter was dominated by service sector growth, however output decreased in both construction and manufacturing. The pound fell on the back of the release with GBP/USD dropping below 1.51. Economists were mixed in their assessment of the figures with very much a “glass half empty/full” view being taken. Given this slightly under-par reading, it does seem likely that interest rates will remain on hold for the rest of the year. Later in the day we had some poor data from the states with core durable goods orders m/m posting their fourth consecutive decline. The reading of -0.8% for December was made all the more worse by November’s reading being revised down further from -0.4% to -0.7%. Cable hit a high of 1.5220 before stopping. We open today at 1.5170 with a relatively quiet day data-wise ahead before the latest FOMC statement at 7pm tonight.

We expect a range today in the GBP/USD rate of 1.5070 to 1.5220.

Euro:

News about Greece continues to dominate the news with new PM Alexis Tsipras naming his new cabinet yesterday. The appointment of Yanis Varoufakis as finance minister sets the new Greek administration on a collision course with the German government. Varoufakis is seen as a hardliner who will be looking for significant concessions from Greece’s creditors to allow the Greek economy to try and grow its way out of the current economic slump. Today is a relatively quiet day on the data front with tomorrows German CPI reading the next top tier release. Fridays flash CPI data is expected to show a fall further into negative territory for the eurozone, with a reading of -0.5% forecast. EUR/USD currently trades at 1.1352 after briefly getting above 1.14 yesterday. GBP/EUR is at 1.3362.

We expect a range today in the GBP/EUR rate of 1.33 to 1.3450.

Aussie and Kiwi Dollars:

Overnight has seen some big moves in AUD/USD as inflation data came in higher than expected. The quarterly trimmed/core reading showed prices rose by 0.7% for Oct-Dec 2014. With 0.5% growth forecast, the Aussie jumped from .79 to briefly trade above 0.80 against the dollar.
AUD/USD currently sits at .7992 with GBP/AUD at 1.8980 a dramatic drop from yesterday’s high of 1.92! Tonight sees the latest RBNZ rate statement with no change forecast from their current 3.5%. We may see some movement before this should the language in the FOMC statement become more hawkish. NZD/USD is at .7462 with GBP/NZD at 2.0328. We expect a range today in the GBP/AUD rate of 1.89 to 1.9055.

We expect a range today in the GBP/NZD rate of 2.02 to 2.0450.

Data releases for the next 24 hours:

AUD: Import Prices q/q

EUR: No data

GBP: Nationwide HPI m/m

NZD: Official Cash Rate; RBNZ Rate Statement; Trade Balance

USD: FOMC Statement; Federal Funds Rate