It’s all eyes on Greece today as we wait on a Greek parliamentary session during which Alexis Tsipras will update politicians on the plans that his Syriza government have put together to reform the country’s economy whilst unlocking further help and aid from the wider European Union. Tsipras is still talking tough about not signing up to any measures that can be viewed as “recessionary” like firing civil servants or cutting wages. The cessation of plans to privatise Greek state assets has fallen silent since Syriza took the helm but the plans remain focused around the closing of tax loopholes.
Of course, closing tax loopholes is all well and good if there is growth within the economy and revenues from consumers and businesses to tax. The level of capital that has left the country since the beginning of the year means that there is less to tax within the economy. All this was typified by Fitch’s decision to downgrade Greece’s credit rating to CCC on Friday. Rumours of capital controls – precluding the transmission of funds out of the country – took the euro lower on Friday afternoon before European Central Bank Supervisory Board Head Nouy said that the central bank considered Greece to be solvent. We will have to wait and see what surprises the politicians have in store for us.
Polls up and polls down
Opinion polls from this weekend have shown a distinct lack of consensus when it comes to voting intentions on May 7th. A YouGov poll for the Sunday Times gave Labour a four point lead yesterday morning as voters warmed to Ed Miliband following his appearance in Thursday’s debate. Another poll from the Daily Mail has the Tories up four points on Labour following a speech by David Cameron in Manchester.
In response, Sterling has remained ambivalent overnight in Asian trade. There will be a poll that shifts sterling like the YouGov poll a fortnight before the Scottish independence referendum and the frequency of these voting intention tests will only increase now that the Parliament is to be dissolved later today.
Cautious Yellen keeps dollar on back foot
A speech by Janet Yellen late Friday evening has kept the USD from gaining too much ground over the weekend. The continued uncertainty on when and where rates will be rising is keeping the dollar from running too much higher. “The actual path of policy will evolve as economic conditions evolve, and policy tightening could speed up, slow down, pause, or even reverse course depending on actual and expected developments in real activity and inflation,” Yellen told a crowd in San Francisco.
The run of strong unemployment data that the US has seen in the past year will be put to the test once again this Friday with the latest payrolls announcement. The Fed has recently amended some of its jobs forecasts that seem to suggest that wage rises will be hard to come by in the next few months. Today’s PCE inflation number should back up the argument that while growth is strong, it is as a result of a low inflation.
Data through the session
Today’s highlights are both inflation based. Apart from the aforementioned US measure we have readings from individual German states before the national number at 13.00. There are no central banker speeches today although we have a fair few through the week. We will not be hearing from the Bank of England for a while as they submit to a pre-election purdah.
