The eyes of the forex market are on Brussels today, where finance chiefs are in talks to try and sort out a deal in response to Greece’s formal request for an extension to its Master Financial Assistance Facility Agreement.
By Peter Martin
Friday, February 20, 2015
They appear to be making some progress: Reuters reported a Greek official as saying, ‘There is an initial agreement on a joint draft text among the institutional partners, which is now being presented to all of the ministers.’ Despite this, nothing has been officially confirmed at the time of writing
"Greece...must remain in the eurozone."
Earlier, there were encouraging comments from both French President Francois Holland and German Chancellor Angela Merkel. Mr Holland said ‘Greece is in the eurozone and it must remain in the eurozone’, while Mrs Merkel added that German policymakers were ‘very much geared towards Greece remaining in the euro’. A story run by German magazine Der Spiegel claiming the European Central Bank is readying plans to cover the possibility of a Greek exit from the euro in the event suggests things may not be quite so rosy though.
By early afternoon in New York, the euro had gained 0.23% against the dollar, to stand at $1.1397.
Elsewhere, the Canadian dollar weakened after data showed an unexpectedly big drop in Canadian retail sales. The 2.0% decline in December’s retail sales was the largest contraction since April 2010 and comes at a time of year that is historically strong, raising the possibility that the Bank of Canada could be pressured into make another cut in interest rates. USD/CAD rose 0.24% to 1.2524.
PMI exceeds estimates
The big news for the US economy today was preliminary manufacturing data for February from Markit. The flash manufacturing PMI for February rose to a level of 54.3, exceeding estimates and comparing favourably to both mid-month (53.7) and month-end (53.9) in January. Production levels are high, but growth in areas such as new business and employment is slowing. Regional data sets this week in the form of the Empire State and Philly Fed surveys have pointed to slower, but still healthy, levels of growth and this latest indicator does little to alter that impression of the sector. More regional manufacturing surveys follow next week, as well as hard data in the durable goods orders report on Thursday.
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