The FTSE is expected to open 4 points higher

Greece appears no closer to agreeing a cash-for-reforms deal with its creditors despite repeated claims from Varoufakis that a deal is close. Investors may be more encouraged by those claims had we not had such mixed messages from officials recently. The only consistent message coming from the talks is that both sides remain far apart on certain issues, particular labour market and pension reforms and there’s been no specific suggestions that significant progress has been made on either of these.

The one thing that appears clear now is that Greece will not be able to repay €300 million to the IMF on 5 June. With €1.6 billion in total due to be repaid to the IMF next month that would have given negotiations the strict deadline they in all honestly have been craving if any real progress has been made. There have been suggestions that all four repayments to the IMF next month could be combined and paid as one at the end of the month but we can only hope this isn’t the case because otherwise this will inevitably drag on for another month and change absolutely nothing.

It is likely that Greece will be discussed at today’s G7 meeting in Dresden, given that a number of involved officials will be present but this will just be one of many topics being discussed so I very much doubt talks will yield any kind of solution or progress of any kind. Unfortunately that is only likely to come once certain Greek red lines are redrawn.

With no notable economic data being released on Wednesday, attention is likely to remain on Greek negotiations but the markets still appear to be being driven by Fed rate hike expectations. Even early in the session yesterday we could see Yellen’s comments from Friday weighing and that batch of data from the US only supported her view that a rate hike should come this year.

In the coming sessions, in the absence of much economic data or developments in Greece, I expect this rate hike to be increasingly priced in which would support further rallies in the dollar. This could pile further pressure on commodity prices, as we saw yesterday and therefore weigh on the wider equity markets.

The Bank of Japan minutes released overnight were rather downbeat despite the belief that the 2% inflation target would be achieved in two years. There appears to be a real concern that a lack of real wage growth is preventing inflation rising by any significant amount and this could feed through to lower inflation expectations, which would leave them at square one. I think we could see further stimulus from the BoJ this year if we continue to see these lackluster inflation and wage growth figures as the current efforts have been stifled by last year’s sales tax hike.

The FTSE is expected to open 4 points higher, the CAC 15 points higher and the DAX 24 points higher.