Euro to Look Past German IFO Data, Focus on Greece Endgame

Talking Points:

German IFO Data Unlikely to Fuel Euro Volatility on Limited ECB Impact
Greece Still in the Spotlight as Athens Presents Reforms to Unlock Funding
Swiss Franc Corrects Lower, Canadian Dollar Continues Friday’s Selloff

Germany’s IFO Survey of business confidence headlines the data docket in European trading hours. The forward-looking Expectations component of the report is expected to show sentiment firmed for a fourth consecutive month in February, reaching the highest level since July 2014. News-flow from the currency bloc has outperformed relative to expectations over recent weeks, hinting an upside surprise may be in the cards. A meaningful positive response from the Euro seems unlikely however considering the release’s limited implications for the trajectory of ECB monetary policy as the central bank prepares to launch QE next month.

Ongoing developments from Greece may prove to be a greater catalyst as Finance Minister Yanis Varoufakis and company hustle to put together a list of reforms to be implemented in exchange for a four-month extension of bailout funding. Markets will be looking for clues suggesting the Eurogroup (and the German contingent in particular) have accepted this menu of initial measures, averting an imminent cash crunch and pushing Greece-related worries into the background for now. That is likely to offer a boost to the single currency and may likewise encourage a pickup in risk appetite, weighing on the safety-linked Japanese Yen.

The Swiss Franc underperformed in overnight trade, falling as much as 0.6 percent on average against its top counterparts. The move appears corrective after Friday’s dramatic 1.12 percent advance, which marked the largest daily rally in a month. That move looked reflect Greece-inspired worries in the run-up to the announcement for the aforementioned 4-month funding extension deal. The Canadian Dollar likewise declined in what looked like follow-on momentum from Friday’s losses in the wake of a disappointing Retail Sales data. The report showed receipts unexpected fell 2 percent in December, amounting to the worst outcome since April 2010.

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Asia Session

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CCY

EVENT

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EXP

23:50

JPY

BOJ Releases January Meeting Minutes

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2:00

NZD

Credit Card Spending (MoM) (JAN)

1.9%

-0.5%

2:00

NZD

Credit Card Spending (YoY) (JAN)

6.2%

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4.5%

5:00

JPY

Supermarket Sales (YoY) (JAN)

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European Session

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CCY

EVENT

EXP

IMPACT