Unbelievable!
This week has got off to a quiet start with little in the way of data to get the market excited. Fridays better than expected US employment report gave the market a more risk friendly tone going into the weekend with equities performing well in the US on Friday and continuing into Asia overnight.
Greek bond spreads have tightened in again today after weekend reports, confirmed and clarified further today that the Euro zone member states are looking to launch a sweeping new European initiative to reinforce economic cooperation and surveillance within the Euro zone, including an IMF style operating fund, the European Monetary Fund (EMF).
Elsewhere the OECD said that Norway should raise its key policy rate firmly and progressively as the fiscal expansion poses a risk to monetary policy and the exchange rate. They also stated that the central bank should improve its communication with the market.
In the UK there were some positive undertones today as the Norwegian government pension fund, (one of the worlds largest SWF’s) stated that they have “strong confidence in UK gilts going forward”. In addition to that the ex Editor of the Economist magazine and Anatole Kaletsky both penned positive exchange rate articles in today’s Times, extolling the virtues of both GBPEUR and GBPJPY respectively at these levels, an mirroring the views of 3DCM.
Talk of a UK gilt coupon payment today undermined GBP towards the end of the day but the underlying picture has become more positive from the all out panic selling we witnessed at the end of last month.
For the rest of the week the data calendar includes an interest rate decision from the RBNZ (though they are unlikely to alter policy at this juncture), Industrial production from Japan, France, Euro zone and the UK, Swiss CPI and Japanese GDP. The eyes of the FX markets will however continue to be driven by sentiment and equities.