The Greek talks seem to have reached an impasse as Greece have yet to accept the final offer put forward by creditors last Friday. The Greek situation was the main topic of conversation at yesterdays meeting of European finance ministers with ministers calling for Greece to speed up their structural reforms and agree a deal with its creditors so the second bailout package can be delivered in time for loan repayments due in March. The likelihood is that a deal will be reached as it is in most peoples interest that Greece does not default at the present time however as each day passes without an agreement governments and the markets get more and more nervous. The most surprising aspect given the circumstances has been the recent strength of the Euro with EUR / USD hitting a 3 week high earlier this morning. Japan’s growth worries continue with a bleak outlook forecast by the Bank of Japan earlier this morning saying that they expect the economy to contract. The strength of their currency is one of their problems and they may look at intervention in the future to boost their exports.
The UK had some promising news this morning with public sector borrowing beating expectations and coming in lower at then last month at 10.791 Billion compared to 15.085 Billion the previous month. The debt levels are still very high but it shows that some of the measures taken by the government are starting to have an impact even if there is still a long way to go. There was also some positive economic figures out of Germany and Europe this morning with PMI data being better then expected across the board. Following on from this morning’s data will be retail sales figures from Canada at 13.30 and Japans trade balance out at 23.50 tonight.
The market could be quite flat until we hear of a decision on the Greek talks at which point we should see movement depending on the outcome. We still see the Euro weakening over the course of this year but it may take months rather then weeks as we initially thought.
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