“We expect the Greeks to rise to their responsibilities. This coming Monday, we will see whether Greece delivers or whether we will be forced to decide on another course of action, one that is not desired”
– Steffen Kampeter, German Deputy Finance Minister
The Euro rose against the US dollar and the Yen on Friday on hopes Greece was nearing a deal to secure a new rescue package despite rising worries about the ability of Greek leaders to rule the debt crisis.
“We are seeing upward momentum in prices of food and other commodities that producers can’t pass along to consumers because consumers are still very fragile”
– Lindsey Piegza, an economist at FTN Financial
The Consumer Price Index (CPI) climbed 0.2% in January slightly below analyst median forecasts of a 0.3% advance, said the Department of Labor on Friday. On yearly basis CPI added 2.9%. Core consumer price index which excludes volatile energy and food costs also ascended 0.2%, matching earlier expectations.
“With unemployment on an upward trend, credit conditions tightening and real incomes still being squeezed, the underlying conditions for [UK] consumers are still tough”
– Samuel Tombs, Economist at Capital Economics
Mervyn King, BoE Governor, claimed that the cooling inflation will continue to curb consumption and ease the situation for customers. Analysts believe that the high-street sales are growing, while the employment is struggling and the loan availability is shrinking.
“Markets are confident that Greece will finally receive the second bailout package and reach a haircut deal”
– Alessandro Fezzi, senior market analyst at LGT Capital Mana gement AG in Switzerland
The Swiss Market Index (SMI), a measure of Switzerland’s biggest and most actively traded companies, added 0.33 per cent on Friday and is now 6,237.69.
“Much will depend on Japan’s political leadership and its ability to forge a political consensus on how to offset fiscal measures in the future”
– Standard & Poor’s
In an attempt to decrease cumbersome public debt which has reached incredible proportions, Japanese government intends to hike current sales tax twofold within the next four years.
“The long-term implications still point to a weaker euro/dollar and any rally is just temporary relief before the next major leg lower towards 1.2000”
– DailyFX (based on CNBC)
Despite EUR/USD bouncing off 1.2974, the outlook remains bearish for the pair. Below this support the price should target 1.2891/54 first, then 1.2634. Resistances are located at 1.3235/50 and at 1.3322.
“With investors already bidding up risky assets on the heels of China’s [monetary easing], any progress on a second bailout for Greece will only add to the upside momentum”
– GFT (based on Marketwatch)
EUR/JPY is currently facing a tough resistance zone at 105.44/106.80 which is unlikely to be breached at the very first attempt. Nonetheless, the bias is bullish as long as the pair trades above a key support at 101.67.
“The pound is likely to gain against the USD and other safe havens if risk appetite recovers on better euro zone news”
– Lloyds (based on Reuters)
The Cable is advancing toward 1.5917 (200 day ma) at the moment. However, this resistance line is not expected to be breached. On the contrary, we are likely to observe a trade off down to 1.5645 following an encounter.
“A move above 80-82 yen is probably in sight and then we would look at reducing our short yen positions slightly”
– Barings Investment Management (based on CNBC)
The initial resistance for the pair is situated at 79.55, followed by 79.89 and 80.00. In the long-term the pair is targeting 86.85, though it will have to overcome 82.80 and 85.53 first. Dips should be halted by supports at 78.41, 78.29 and 77.77.
“With the [US] economy now operating below its capacity and many resources still underutilized, we forecast that the recovery will continue to gain strength”
– Economic Report of the President
USD/CHF is anticipated to consolidate ahead of 0.9080/66. After forming a base the pair should retest a strong resistance at 0.9318/31. In case the latter level is penetrated, the rally is likely to extend up to 0.9595.
Euro Zone Seeks Central Banks Help in Greek Bailout
Euro zone governments are looking to the European Central Bank and national central banks to help pare back the cost of a second rescue package for Greece which would otherwise amount to 170 billion euros.
US consumer prices up 0.2% in January
US consumer prices rose by 0.2% in January, driven by the rising cost of clothes and petrol, the US Labor Department has said.
China home-sale data show prices slumping
New data showed a sharp slowdown in China’s housing market, with prices generally flat or lower, and with one financial broker citing a government report that no new homes were sold in Beijing during the recent weeklong Lunar New Year holiday.