Focus of the day:'
"USD: Quiet week, retail sales in focus. It will be a fairly quiet week in terms of US economic data with retail sales (Thursday) the only major data to note. For January, we expect headline retail sales of -0.3% m/m (consensus: -0.4%) and core sales of 0.4% (consensus: 0.5%). Our forecast is broadly in line with consensus and as such likely to have limited directional implications for the USD.
EUR: All eyes on Greece ahead of euro area GDP. Attention will focus on the Eurogroup meeting (Wednesday), where discussions will revolve around the design and implementation of a program of further financial aid for Greece. With the Greek proposal to find a bridge solution to extend negotiations until the end of May now looking rather unrealistic, we see heightened risks of a Greek exit and an EMU crisis.
In terms of data, we expect the euro area Q4 flash GDP estimate (Friday) to print at 0.2% q/q, in line with consensus expectations.
As a result, we recommend being short EURUSD as we expect a significant political risk premium to become embedded in the EUR."
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