Talking Points:
- Euro Shrugs Off Initial Selling Pressure Following Greece Election Outcome
- German IFO to Pass with Little Fanfare on Limited ECB Policy Implications
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Aftershocks following the weekend’s Greek election defined price action in overnight trade. The outing produced a strong victory for the anti-austerity Syriza party, as amply telegraphed in polls ahead of the vote. While the victorious Alexis Tsipras and company appear to have fallen just shy of an outright majority in parliament, a preliminary coalition deal with the likewise euroskeptic ANEL party seems to be taking shape already.
The announcement initially sank the Euro and weighed heavily on risk appetite, driving haven demand for the Japanese Yen and weighing on higher-yielding FX including the Australian and New Zealand Dollars. The British Pound likewise emerged as a winner, seemingly finding support in capital flows seeking a regional alternative to Eurozone financial markets.
The move has at least partially fizzled ahead of the opening bell in Europe however: while the Aussie and the Kiwi remain under pressure as S&P 500 futures point to lingering risk aversion cues, the Euro and Yen have all but erased moves recorded in early Asia. The Pound remains well-supported.
The reversal may reflect the extent to which the Syriza victory was well-telegraphed months ago and widely expected as well as the fading supply of negative news-flow threatening the common unit. Indeed, with the ECB’s QE program already announced and the Greek election in the rearview mirror, the markets may have seen the extent of anti-EUR developments for the time being.
January’s German IFO survey of business confidence headlines the economic calendar in European hours. The headline Business Climate index is expected to rise for a third consecutive month, hitting the strongest level since July at 106.5. The outcome seems unlikely to yield much of a reaction from the single currency however considering its limited implications for near-term monetary policy after last week’s high-profile stimulus expansion.
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Asia Session
GMT | CCY | EVENT | ACT | EXP | PREV |
21:30 | NZD | Performance Services Index (DEC) | 56.5 | - | 54.7 |
23:50 | JPY | Trade Balance Total (¥) (DEC) | -660.7B | -735.2B | -893.5B |
23:50 | JPY | Adjusted Trade Balance (¥) (DEC) | -712.1B | -743.1B | -832.5B |
23:50 | JPY | Exports (YoY) (DEC) | 12.9% | 11.2% | 4.9% |
23:50 | JPY | Imports (YoY) (DEC) | 1.9% | 2.0% | -1.6% |
23:50 | JPY | Bank of Japan December Meeting Minutes | - | - | - |
2:00 | NZD | Credit Card Spending (MoM) (DEC) | -0.6% | - | 0.4% |
2:00 | NZD | Credit Card Spending (YoY) (DEC) | 4.5% | - | 5.1% |
European Session
GMT | CCY | EVENT | EXP | PREV | IMPACT |
9:00 | EUR | German IFO - Business Climate (JAN) | 106.5 | 105.5 | Medium |
9:00 | EUR | German IFO - Current Assessment (JAN) | 110.8 | 109.8 | Medium |
9:00 | EUR | German IFO - Expectations (JAN) | 102.5 | 101.4 | Medium |
9:30 | GBP | BBA Loans for House Purchase (DEC) | 36500 | 36717 | Low |
Critical Levels
CCY | Supp 3 | Supp 2 | Supp 1 | Pivot Point | Res 1 | Res 2 | Res 3 |
EURUSD | 1.0713 | 1.0972 | 1.1088 | 1.1231 | 1.1347 | 1.1490 | 1.1749 |
GBPUSD | 1.4824 | 1.4908 | 1.4949 | 1.4992 | 1.5033 | 1.5076 | 1.5160 |
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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