Monday, June 1, 2015

Busy week at month start | Non Farm payrolls and two central bank meetings

The first week of every month is a busy one for economic announcements, and June will be no exception. Greek bailout negotiations with the EU and the IMF continue to rumble on. It would appear that the promised resolution “by Sunday” has not materialised, although Alexis Tsipras, Greek PM, had a conference call with both Angela Merkel and Francois Hollande yesterday, according to the newswires. There are no reports of any breakthrough having come out of this.

Discussions at a very lively lunch that your commentator had yesterday with senior figures in insurance and banking did not reach any kind of consensus either. These two avid watchers of the economic situation were evenly divided on the question of whether the EU will want to allow Greece to default and leave the Euro. Every angle was discussed, including the apparent desire of most Greek people to remain in the Single Currency and the shock to the Euro system that the mere precedent of a member state leaving or being forced to leave would produce.

Meantime the EURUSD pair remains in middle of the range it has established since the end of January, which is centred on 1.10 US dollars to the Euro, although this is firmly below the 200 Day EMA, which is a bearish signal (see chart above).

Non Farm payrolls, two central bank meetings and inflation

This week will see the monetary policy statement and press conference from the ECB, on Wednesday, and the Bank of England Monetary Policy Committee meeting on Thursday. Inflation figures will be released for the Eurozone on Tuesday. The most important announcement of course will be the US Non-Farm Payrolls report on Friday. Last month this bounced back to trend after seeing a reduction previously as a result of the poor weather condition Stateside over the Winter. The market is expecting a figure in advance of 200k and anything less than that will impact the US dollar negatively.

On Wednesday the private company, ADP, will release its own estimate of payroll figures. These sometimes correctly anticipate the official NFP numbers, and sometimes they do not.

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