Weekly Market Review

Last week saw continued volatility in the markets particularly in relation to the Euro with so many factors coming in to play in the recent weeks. The week finished with data for both the Euro-zone and the UK and large swings were seen throughout the day’s trading. Euro Manufacturing and Services PMI more or less met expectations with no real impact to exchange rates. The Euro did however come under some selling pressure in the morning with the markets nervous of the difficult negotiations going on with Greece.

UK Retail Sales followed with some poor results as they contract by 0.3% on the month meaning the annual growth figure fell short of 5.9% forecasts posting a 5.4% actual result. This negative announcement was however balanced slightly by much improved Public Sector Net Borrowing figures which now show a surplus for UK accounts of £9.4B compared to a previous deficit of a similar amount. The markets however focussed on the Retail Sales and the pound struggled in morning trading.

Greek Negotiations

On Friday the Eurogroup met again to further discuss the Greek financial crisis. In a huge step forward following another tense meeting, a 4 month extension has been agreed to Greece’s bailout programme removing the immediate fear of a Greek exit from the Euro-zone. A list of reform measures is to be presented by Greek authorities today and the agreed 4 month extension is subject to the quality of these proposals in which the Greek government aim to crack down on tax evasion and streamline their civil service to generate more capital. The final decision for approval will be announced tomorrow with it now seeming likely that a deal is near done and the Euro is already enjoying some renewed strength that could see GBP/EUR drop from is current highs over the coming days and weeks.

The Week Ahead

This week will likely be driven by market sentiment with sterling showing signs of dropping away from its recent gains and the Greek situation still unresolved which is directly affecting Euro fluctuations. There are however some key releases this week to keep an eye on as detailed below:

Tuesday 24th
10:00am (EUR) – Consumer Price Index
3:00pm (USD) – Consumer Confidence

Thursday 26th
8:55am (EUR) – German Unemployment
1:30pm (USD) – Consumer Price Index / Durable Goods Orders

Friday 27th
9:30am (UK) – Gross Domestic Product
1:30pm (USA) – Gross Domestic Product