Franc Gains as ECB Shuns Greek Bonds, Pound to Look Past Static BOE

2015-02-05 05:57:00

Talking Points:

Franc Gains as ECB Says Greek Bonds Unacceptable as Collateral
Australian, New Zealand Dollars Rise After China’s 50bps RRR Cut
Bank of England Rate Decision Likely a Non-Event for the Pound

The Swiss Franc outperformed in overnight trade, rising as much as 0.3 percent on average against its top counterparts. The move appears to have reflected regional safe-haven flows after the ECB announced that it will no longer accept Greek government bonds as collateral for lending.

That sent jitters across financial markets amid worries of oncoming capital shortages and potential bank failures in the event Greek lenders run short on liquidity. Reports suggesting the central bank will make the ELA emergency facility available dampened concerns to some extent however.

The Australian and New Zealand Dollars likewise pushed higher, adding as much as 0.5 and 0.3 percent respectively against the majors. The move appeared to reflect optimism linked to the PBOC, which unexpectedly announced a 50 basis point cut in its reserve requirement ratio.

China is Australia and New Zealand’s largest trading partner and markets likely speculated that an easing of monetary policy that boosts growth there may bode well for the two Oceanic countries’ export demand profiles. That may in turn translate into better overall growth prospects and limit scope for on-coming RBA and RBNZ interest rate reductions.

A monetary policy announcement from the Bank of England headlines the economic calendar in European trading hours. Mark Carney and company are widely expected to keep the status quo in place, meaning no statement is likely to be issued. That will probably mean the announcement will amount to a non-event for the British Pound, with the currency waiting for next week’s quarterly Inflation Report for policy cues.

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Asia Session

GMT	CCY	EVENT	ACT	EXP	PREV
0:00	AUD	HIA New Home Sales (MoM) (DEC)	-1.9%	-	2.2%
0:30	AUD	Retail Sales s.a. (MoM) (DEC)	0.2%	0.3%	0.1%
0:30	AUD	Retail Sales Ex Inflation (QoQ) (4Q)	1.5%	1.1%	0.9%

European Session

GMT	CCY	EVENT	EXP	PREV	IMPACT
6:45	CHF	SECO Consumer Confidence (JAN)	-13	-11	Low
7:00	EUR	German Factory Orders s.a. (MoM) (DEC)	1.5%	-2.4%	Medium
7:00	EUR	German Factory Orders n.s.a. (YoY) (DEC)	0.7%	-0.4%	Medium
8:30	EUR	Markit Germany Construction PMI (JAN)	-	50.5	Low
9:00	GBP	New Car Registrations (YoY) (JAN)	-	8.7%	Low
9:00	EUR	ECB Publishes Economic Bulletin	-	-	Low
9:10	EUR	Markit Germany Retail PMI (JAN)	-	51.7	Low
9:10	EUR	Markit Italy Retail PMI (JAN)	-	42.8	Low
9:10	EUR	Markit Eurozone Retail PMI (JAN)	-	47.6	Low
9:10	EUR	Markit France Retail PMI (JAN)	-	46.5	Low
12:00	GBP	Bank of England Rate Decision	0.50%	0.50%	High
12:00	GBP	BOE Asset Purchase Target (£)	375B	375B	High