Anticipation kicks in before a busy end to the week
Yesterday was a fairly quiet day on the data release front, but it seems anticipation ruled the markets with GBP/EUR rates pushing up over a cent to a high of €1.3121. With an expected quantitative easing announcement from the ECB and Greek elections coming up in the next few days, both of which are likely to cause heightened volatility on the markets, today’s report will concentrate mainly on the Eurozone.
The main data release of note yesterday was the German investor confidence poll from ZEW. This rose for a third consecutive month, reaching its highest level since February 2014. Good news for the largest economy in the Eurozone, but it was brushed aside as investors anticipated Thursday’s probable announcement of an expanded quantitative easing programme from the ECB.
The Eurozone is struggling with negative inflation for the first time since the financial crisis in 2009. Mario Draghi and the ECB are looking to raise inflation by pumping money into the financial system, in turn also boosting the wider economy. This would generally be seen as a negative towards the euro with increased supply weakening the currency. However on the flip side this could be seen as a confident and positive move with the ECB looking to do everything in their power to not let the Eurozone fail.
On Sunday, three days after the expected ECB announcement, we have a snap election in Greece. Greek far left party Syriza is currently leading the opinion polls. Syriza have promised to end austerity, renegotiate Greece’s bailout agreement and restore labour rights. Should they come in to power there is wide expectation that Greece could be leaving the euro currency bloc, which would send shockwaves through the market.
Today’s data releases
A busy day for the UK today. We have the BoE Monetary Policy Committee meeting minutes, including the results of how each member voted regarding their stance on interest rates. It is not expected that any of the members will change their vote from the previous meeting, so this could be a bit of a non-event. However, were any member to unexpectedly change their view then this could send a shockwave through the markets. We also have average earnings, claimant count rate and unemployment data out from the UK.
No data releases from the Eurozone today. All eyes will be on them tomorrow.
The US will release their mortgage applications, building permits and housing starts data. These are all fairly low key releases and with little movement expected, so it could be a quiet day for the dollar.
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