Greece delivers following bailout

To the UK first, where last week GBP dipped against EUR following the Greek’s successful procurement of a much needed bailout, avoiding a recession at the same time. We also saw somewhat depressed employment data last week which dented Sterling’s fortunes, including average earnings which were down to 2.4%- 0.4% less than expectedtowards the end of the week, however, the pound was able to claw back from losses, ending things at over 1.4 to the euro, and 1.56 against the dollar.

This week won’t yield to much data – markets are still on tenterhooks over when the interest rate will be hiked, but with there being no solid economic news from the UK, especially regarding employment particulars, the wait is still on for when the hike might occur. Estimates have now been pushed back to Q2 next year – with September 2015 having been touted pretty heavily before. We’ll see CPI data out tomorrow, and retail sales and public sector borrowing later on in the week.

In Europe, Greece’s confirmed bailout did wonders for the beleaguered country and the single currency which saw it gain against the other majors. Extraordinarily, Greece was also seen to have had a better Q2 this year in terms of economic expansion. This was despite not-so-great data from Germany where ZEW sentiment was seen to fall to the lowest level since November last year, while quarterly GDP was seen to drop to 0.4%.

It doesn’t all look hunky dory for Greece as there is now a forecast that Greece’s debt will hit 200% of its GDP by next year. This certainly means that the single currency will remain sensitive to what goes on with the Greeks. Aside from that, there isn’t too much to write home about from the Eurozone this week, aside from manufacturing data on Friday. A lot of responsibility rests on Germany’s shoulders as the primary driver of the commonality.

Stateside, we saw some interesting comments from the FOMC’s Lockhart that the ‘time is fast approaching to normalize monetary conditions’. Consumer spending, a primary indicator of economic health, is on the increase – up to 0.6% from 0.0% previously. There was a slight spike in unemployment claims, although not enough to rattle the dollar, and month PPI data showed the inflation in the consumer sector increased .2% more than forecast.

For the time being, the wait is on for the September Fed meeting where the interest rate decision is to be announced. We’ll see a lot of data this week, though, including unemployment data, manufacturing index, existing homes sales, and monthly CPI numbers.