Greek debt, Eurogroup meeting and Minutes

Greek debt

Markets have been all about risk sentiment during these last few days, mainly focus on the Greek debt issue. Ever since the far-left Syriza party won the elections and PM Alexis Tsipras took over the country, fears over a ´Grexit´ escalated. The weekend announcement by Tsipras that he plans to go on with anti-austerity measures fueled risk aversion, although an emergency EU group meeting this week eased fears, as at least the country started talks with its counterparts. Nevertheless, and despite authorities gave cheerful unofficial comments, the discussions were kept to a minimum as formal talks will resume at the  Eurogroup meeting of finance ministers next Monday, Feb 16.

So far, the only measure taken came from the ECB's  Governing Council, that  extended a cash lifeline for Greek banks for another week, authorizing an extra €5 billion in emergency lending assistance by the Greek central bank. The council decided in a telephone conference to review the program next Wednesday. 

Greek Tsipras pretends to reach a new financial agreement with its creditors, not longer known as the Troika but as "the institutions" as he prefers to call them, that may include a debt cut and a new program with easer conditions; in the meantime, there has been market talks of a ´loan bridge´ until the new program gets underway. 

Eurogroup meeting

During these days, talks between Greek authorities as EU fin min ended in a deadlock, albeit as said above, some optimism has surged late Thursday. Against the Greek position, Jeroen Dijsselbloem, the Dutch finance minister and Eurogroup president explained that the group preferred choice would be an extension of the ongoing program, something that Greeks are no willing to accept.

Despite a clear outcome is unlikely to be known on Monday, the EU authorities will likely continue negotiating until some kind of deal is reached, without forcing the country to leave the region. So during the next week, the most likely scenario will be further easing in market concerns. Tensions may arise later in the month, if no deal is reached, as the country is said to run out of money by ends of February. 

Central Bank Minutes

During this week several Central Banks will release the Minutes of their latest economic policy meetings, including the BOE, the FED and the RBA while the BOJ will have its monthly economic meeting.

The RBA will release the Minutes of its latest meeting next Tuesday, following the decision of cutting rates to record lows early February, down to 2.25%. The bank governor has been quite dovish ever since, admitting that the Central Banks' ability to  boost economic growth by cutting rates has diminish considerably, and that the high house prices remain a concern. Overall, Stevens is expected to provide a dovish statement, most of it already priced in. If however he anticipates the RBA is ready to continue trimming rates, chances are of further Aussie slides across the board.

Regarding the UK, the Bank of England will release the Minutes of its latest meeting alongside with the monthly employment figures next Wednesday.  The latest BOE's Quarterly inflation report predicted that inflation will continue to fall this year, and even reach negative territory but at the same time expectations build on a rate hike for next 2016, which will leave the UK still behind the US in the tightening path. Last month, Minutes showed that all of the 9 voting members choose to remain on hold, so if the two usual hawks decide to rethink their vote and move back to the 7-2-0 of these last few months, the Pound could surge strongly against its rivals.

Also on Wednesday, the US FED will release the Minutes of its latest meeting, and Ms Yellen is not expected to rock the boat: in December the head of the Central Bank has made it clear that there won't be any rate hike at least until April, and market expectations are of a move in June these days. The market will be looking for any change in the wording, but "patient" when it comes to rates and "strong" when it comes to employment, will likely remain in place, which means market reaction may be limited. 

The BOJ will have its monthly economic meeting next Thursday, following this week news that policy makers view  further monetary easing to shore up inflation as a counterproductive step for now, triggering strong Yen demand. The movement seems to have come in the worst timing ever, as the USD/JPY was finally back above the 120.00 figure and gaining momentum when it was released. PM Kuroda is pretty confident inflation will accelerate this year but he has made it clear that if needed, further stimulus is available. Therefore upcoming meeting should not be a surprise and its effect over the JPY  will likely be limited.