Slippery road ahead as political tensions influence markets
Last week saw a lot of political turmoil in many places. Greece, as predicted didn’t reach an agreement with its creditors and the sirtaki will go on for now. After the renewal and increase in aggression around Donetsk in Ukraine, the biggest European leaders picked up the pace of negotiations and reached a ceasefire agreement with Vladimir Putin.
With the twists and turns of both of these developments European indices climbed and fell, but we wouldn’t call it dramatic. As expected in such situations, traders seem to be waiting for a more final solution for both matters, although it probably won’t come at a single moment.
Earnings season is more or less over for the large companies, but with so much going in the world right now, there will continue to be ample opportunity for trading bigger moves. The euro is holding at just above 1.14 right now on optimism coming after the release of pressure on the Ukraine. But all this can change at the first reports of further aggression, as well as any harder statements from the Greek prime-minister Alexis Tsipras and his finance minister Varoufakis.
Monday, 16.2.15 – Bank holiday in the U.S., so no stock market action there and forex volumes will be lower after 2:30pm GMT when the Americans usually join in the fun. The only economic announcement for the day will come from Japan at with their preliminary GDP number.
Any development on the Greece and Ukraine issues over the weekend might increase volatility especially in the beginning of the trading session. The Eurogroup meeting might also hold surprise on both of these situations, so best to stay around the news feed.
Tuesday, 17.2.15 – The GBP/USD will most likely see some action with inflation numbers coming out at 9:30am GMT.
German economic sentiment will also attract attention on the second day of the week, giving some context from the main economy in the eurozone. Expectations are for an increase to 56.2, a big jump from 48.4. A weak number might fuel speculation about Germany’s leadership and the strength of the euro.
Wednesday, 18.2.15 – The week-long Chinese New Year celebrations kick-off midweek, so volumes in Asia will be lower throughout. Before all that kicks in motion the Japanese Central Bank will have some words to say about their monetary policy – there is no set time for that, so it may come in early or around the middle of their trading session.
U.K. unemployment and jobs data will be in focus, as well as the voting distribution for the official rate of the Bank of England – all will come out at the same time – 9:30am GMT, so prepare for some waves in the GBP/USD and probably in the pairs with the JPY and EUR.
The FOMC will release the minutes from its last meeting. If there are unexpected comments in it, then there might be some market movement (more in indices and stocks than the dollar) at around 7:00pm GMT.
Thursday, 19.2.15 – U.S. data will be in focus with unemployment claims and the respected Philly Fed manufacturing index being announced then.
Friday, 20.2.15 – Manufacturing PMI from the two largest players in the euro-area will come on Friday morning. Retail data from the U.K. and Canada will finish off the day.
Here are our weekend reads, expanding on the topics from the week and other interesting subjects that caught our attention:
Greece was in the spotlight this week and will remain for some time and its juxtaposition against Germany is what many people are looking at. But are there deeper reasons for what is going on. (Financial Times)
With more and more talk of uncertainty some analysts mentioned the term “Minsky moment”, here’s a great description of what it means. (The New Yorker)
HSBC saw their name in the mud at the start of the week, here is a timeline of what has come to be known as “Swissleaks”, with plenty of links included. (The Guardian)