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Markets Set Sights on Greece as Debt Standoff Enters Eleventh Hour

Markets Set Sights on Greece as Debt Standoff Enters Eleventh Hour

Ilya Spivak, Head Strategist, APAC

Talking Points:

  • Traders Withhold Directional Conviction as Greece Debt Impasse Continues
  • Euro Unlikely to Produce Strong Response to February Eurozone PMI Data
  • See Economic Releases Directly on Your Charts with the DailyFX News App

Currency markets were little-changed in the overnight session as traders withheld directional conviction pending an update on the stalemate between Greek and Eurozone officials. The administration in Athens appeared to finally back down from its prior refusal to extend its EU/IMF bailout earlier in the day but Germany refused the overture, saying Greece’s offer leaves too much room for a backslide on existing commitments.

Eurozone finance ministers (the so-called “Eurogroup”) are set to convene for another emergency meeting today in a last-ditch attempt to strike a bargain. Eurogroup President Jeroen Dijsselbloem said Greece has until the end of this week to work out an accord after a similar sit-down on Monday. If previous Eurozone debt negotiations are instructive, that means the coming 24-48 hours represent that critical window when brinksmanship gives way to compromise.

The markets seem to be holding out for just that, but the sanguine mood is sure to give way to panic if investors’ optimism proves misplaced. Although unlikely considering both sides’ inherent interest in a deal, such a scenario remains an uncomfortably acute possibility. This means price action is likely to remain constrained for the time being until the fog clears and a clear-cut outcome – whatever that ultimately is – emerges.

On the data front, the preliminary set of February’s Eurozone PMI figures headlines the docket. The region-wide Composite index is expected to show that manufacturing- and service-sector growth cautiously accelerated for a third consecutive month. The outcome is unlikely to yield a meaningful response from the Euro however considering its limited impact on the ECB policy outlook as it prepares to launch QE in March. Needless to say, Greek-inspired uncertainty will likewise limit follow-through.

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Asia Session

GMTCCYEVENTACTEXPPREV
1:35JPYMarkit/JMMA Manufacturing PMI (FEB P)51.552.552.2

European Session

GMTCCYEVENTEXPPREVIMPACT
7:00EURGerman PPI (MoM) (JAN)-0.4%-0.7%Medium
7:00EURGerman PPI (YoY) (JAN)-2.0%-1.7%Medium
8:00EURMarkit France Composite PMI (FEB P)49.849.3Low
8:00EURMarkit France Service PMI (FEB P)49.949.4Low
8:00EURMarkit France Mfg PMI (FEB P)49.649.2Low
8:30EURMarkit Germany Composite PMI (FEB P)54.053.5Medium
8:30EURMarkit Germany Service PMI (FEB P)54.454.0Medium
8:30EURMarkit Germany Mfg PMI (FEB P)51.551.0Medium
9:00EURMarkit Eurozone Composite PMI (FEB P)53.052.6Medium
9:00EURMarkit Eurozone Services PMI (FEB P)53.052.7Medium
9:00EURMarkit Eurozone Mfg Index PMI (FEB P)51.551.0Medium
9:30GBPRetail Sales ex Auto (MoM) (JAN)-0.3%0.2%Medium
9:30GBPRetail Sales ex Auto (YoY) (JAN)5.9%4.2%Medium
9:30GBPRetail Sales incl Auto (MoM) (JAN)-0.2%0.4%Medium
9:30GBPRetail Sales incl Auto (YoY) (JAN)5.9%4.3%Medium
9:30GBPPublic Finances (JAN)-21.4BLow
9:30GBPCentral Government (JAN)-23.7BLow
9:30GBPPublic Sector Net Borrowing (JAN)-9.3B12.5BLow
9:30GBPPNSB ex Banking Groups (JAN)-9.0B13.1BLow
14:00EUREurogroup Emergency Meeting on Greece--High

Critical Levels

CCYSupp 3Supp 2Supp 1Pivot PointRes 1Res 2Res 3
EURUSD1.12031.12971.13331.13911.14271.14851.1579
GBPUSD1.53061.53671.53911.54281.54521.54891.5550

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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