Yesterday was fairly quiet as markets consolidated across most major pairs, with the U.S on holiday, therefore volatility was fairly low. Traders awaited the Eurogroup meeting which took place in the late evening, as Greece’s deadline beckons as we near the 28th February. As talks began it seemed talks were fairly positive as the Greek finance minister looked to agree with the broad draft statement, however this was short-lived as talks broke down after just a few hours, with claims from the finance minister that the statement changed, saying it was ‘unacceptable’ and ‘unreasonable’. The euro plummeted against major pairs, with EUR/USD reaching lows of 1.132 and EUR/JPY momentarily breaking below the 134 mark, as there is now a wave of uncertainty surrounding the Eurozone until an agreement is formed.
This morning saw the release of Inflation figures for the sterling, with the yearly Core CPI being slightly better than expected, however overall figures were fairly low with the Year on Year at 0.3%. Markets have taken this as a fairly hawkish tone as last week’s inflation report reiterated the short-term low inflation expectations, these figures are therefore in line with the BOE report. GBP/USD has bounced from the 1.533 mark moving towards the 1.54 level, while GBP/JPY has broken above the 182 level.
The ZEW survey has just been released with European Economic sentiment looking more positive at a figure of 52.7, though German sentiment was not as hawkish as expected it was still higher than previous with a figure of 53. EUR/USD is continuing to move higher now moving towards the 1.14 mark, as it pares back losses from last night.
Later will see SNB Chairman Jordan make a speech, which traders will see as an opportunity to deduct the true nature of the intervention of the EUR/CHF pair and whether the peg may be retained now, or whether there will be continued intervention with the use of reserves.
Looking towards tomorrow the BOE rate vote which is looking to be unchanged, but more importantly employment figures where traders will look at the rise of average earnings, as an indication to whether it will help push up domestic inflation in the medium-run.
That’s the wrap for today, Good Luck with your trading endeavours.
By Dhilshan Sandanarajah