Is there a deal on the cards to give Greece more time to negotiate, or isn’t there? Yesterday, an MNI story quoting EU commission sources suggested that Greece might be able to get a six-month extension of funding to allow the two sides time to come up with an agreement, but Germany’s Finance Minister Wolfgang Schaeuble said that there were no plans to give Greece any more time.
Today sees a meeting of EU finance ministers, so watch for the latest ad hoc headline risks to emerge late this afternoon or this evening in the wake of this meeting. Tomorrow sees an EU summit.
The finance ministers of the Eurozone are set to meet in Brussels today. Photo: iStock
Before we get too excited about New Zealand’s house prices falling minus 1% for two consecutive months, we need to know that this is not a seasonally adjusted data series, and that the January reading matched the highest reading for that month since 2007. Also, prices generally rebound in February and March for whatever reason.
Australia’s latest jobs data are set for release tonight. After two very strong months of payrolls gains, the tendency in the data series is for strong mean reversion, and a minus 5k reading is expected, but there may be additional downside risk to that given the history of the data series.
Also watch the unemployment rate for a possible tick higher – there was a sharp drop in the rate late last year, but this was in the wake of a change in the methodology with which Australian jobs data is tallied.
Look out for The Bank of England inflation report tomorrow (seems like the focus should be on the UK’s awful imbalances rather than speculation on labour slack and the timing of the first hike, but let’s see.) We also have the Riksbank on tap with its decision on whether the time is ripe to move ahead with QE. Huge volatility potential in SEK pairs on that one.
Chart: USDCAD
The 1.2400 area in USDCAD was maintained in recent days as a strong support level, and the break back above local resistance in the 1.2550 area sets the focus back higher again, as the US versus Canada two-year interest rate spread is actually positive in favour of the US for the first time since 2009. 
The G-10 rundown
USD: Looking stronger again, particularly in USDJPY and USDCAD, though it’s not breaking stronger across the board yet. But another wave higher puts it on the rally path it deserves to be on, particularly watching for GBPUSD to punch back below 1.5200, AUDUSD below 0.7750 and EURUSD below 1.1250 to call the USD the king of the mountain at the moment.
EUR: An attempt at local support was beaten back yesterday and the market is nervous about taking positions because of the constant stream of ad hoc headline risks we have seen over the last week. These will continue with today’s meeting of EU finance ministers, but the pressure remains on the downside.
JPY: A break above 119.25 area is the focus for USDJPY as we look for follow through. JPY under pressure in other crosses as well, with EURJPY trying to get clear of 135.00/25 resistance. Strong risk appetite and another rise in yields would support further JPY weakening.
GBP: Strong against the US dollar on recent strong UK data, but BoE inflation report represents a two-way risk and hard to see what the strong upside risk is from this event after the two hawkish dissenters stepped down from their dissent (in favour of immediate rate hikes).
CHF: Seem to have a delayed reaction to yesterday’s news that the Greek situation may drag on for quite some time before we know what will happen, which takes away some of the safe haven appeal from CHF. EURCHF making a bid to stay in range and USDCHF could be set for a break above 200-day moving average now above 0.9300.
AUD: AUDUSD stuck in no man’s land as the market doesn’t seem to care to take a view on the currency at the moment. Still looking for a downside resolution, but need to get clear of 0.7750 to generate technical interest.
CAD: Weaker oil prices had the pair trying back above 1.2600 yesterday and this helps underline the near term support and keep the focus higher, with 1.2550 as the support.
NZD: Has the upper hand against the AUD at the moment as 1.0500 has been taken out. Still looking for signs of downside interest in NZDUSD – note that 0.7450 held once again in that pair overnight.
SEK: Massive anticipation of whether the Riksbank announces QE and if so, how much and whether this is priced into EURSEK. Big two-way risks here and huge volatility potential with pricing gaps possible on the announcement, so trade accordingly.
NOK: Yesterday’s high CPI release is largely irrelevant as the focus is on the degree to which the huge sell-off in crude oil will impact Norway’s economy and reveals its lack of competitiveness. Still like the idea of EURNOK finding support soon and rallying, with USDNOK as an alternative.
Economic Data Highlights
- Australia Feb. Westpac Consumer Confidence out at 100.7 vs. 93.2 in Jan.
- Australia Dec. Home Loans rose +2.7% MoM vs. +2.0% expected
- New Zealand Jan. REINZ House Price Index fell -1.0% YoY vs. -1.0% in Dec.
Upcoming Economic Calendar Highlights (all times GMT)
- Norway Q4 GDP (0900)
- Poland Jan. CPI (1100)
- Hungary Central Bank Meeting Minutes (1300)
- US Fed’s Fisher (of Dallas Fed) to Speak (1300)
- Australia RBA Assistant Governor Debelle to Speak (2200)
- Japan Dec. Machine Orders (2350)
- Japan Jan. PPI (2350)
- UK Jan. RICS House Price Balance (0001)
- Australia Jan. Employment Change and Unemployment Rate (0030)