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Spreadex Market Update

Thursday, February 05, 2015 - Afternoon Market Update
Connor Campbell - Market Analyst at Spreadex

Eurozone digests ECB move, oil back to its usual inconsistent self

Syriza appeared to lose another potential ally as Francois Hollande backed the legitimacy of the ECB’s move, whilst over in Germany Varoufakis had his showdown with Wolfgang Schauble. It was reported to be a long and difficult exchange, with Schauble stating that they weren’t in ‘full agreement’, that he was ‘slightly sceptical’ of some of Greece’s proposals, and that a debt haircut was off the table. Varoufakis differed slightly, saying that the haircut was simply not discussed, and that Germany can expect a ‘frenzy of reasonableness’ from Greece. Given the platitudes of these kinds of press conferences, the comments from Varoufakis and Schauble likely hide more terseness than was on display. Another sting to Greece was Schauble’s reaffirmation that Syriza will have to co-operate with the ‘troika’ they so despise; however, this meeting seems to have followed the same trend as the rest of this Euro tour, with little in the way of progress made.

Elsewhere in the Eurozone, an EU Commission forecast saw outlooks increased for the region’s GDP, from 1.1% last year to 1.3%, with inflation likely to increase in mid-2015. The ECB stated that QE will continue until these sustained changes to the direction of inflation are felt; however there were also claims that if the inflation targets are reached prematurely, then QE could potentially end before its tabled September 2016 date. This news buoyed the Eurozone indices briefly, but the gains couldn’t be sustained, leaving a mixed picture across the region.

One big benefactor of the Eurozone’s bullish data this morning has been the euro, which has continued to make gains against the dollar. As it has done of late, the growth from the euro has hurt gold, with the metal slipping back to $1262 per ounce over posting a slight improvement yesterday.

Oil has seen a microcosm of the past few days’ volatility this morning, as it flitted between $53 and $55 per barrel, whilst copper continued to copy the black stuff’s every move; this led the FTSE to a rather flat Thursday as the commodities led it by the nose. And in a move that shocked literally no-one, the Bank of England opted to keep interest rates at 0.5%.

Finally this afternoon sees another flurry of figures from the US, as it announces its trade balance, unemployment claims and preliminary non-farm productivity. These latter two figures especially will be important, as they will provide some kind of indicator of the state of Friday’s actual non-farm employment change number. The US futures are green at the moment; however, the country’s current track record with data is pretty dismal, so the picture might be different come this afternoon.

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The Trading Day and Week Ahead

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