Daily Market Report 21/08/15

EUR
Last night Greek Prime Minister Alexis Tsipras resigned, hoping to strengthen his hold on power in snap elections after seven months in office in which he fought Greece's creditors for a better bailout deal but had to cave in.

Tsipras submitted his resignation to President Prokopis Pavlopoulos and asked for the earliest possible election date, which is expected to be on the 20t of September. 

Tsipras resigned seeking to crush a rebellion in his leftist Syriza party and seal public support for the bailout program, Greece's third since 2010, which he negotiated. Faced with a near collapse of the Greek financial system which threatened the country's future in the euro, Tsipras was forced to accept the creditors' demands for yet more austerity and economic reform - the very policies he had promised to scrap when he was elected in January.

But a snap election should allow Tsipras to capitalize on his popularity with voters before the toughest parts of the latest program - including further pension cuts, more value-added tax increases and a "solidarity" tax on incomes - begin to bite. This may allow him to return to power in a stronger position without anti-bailout rebels in Syriza to slow him down.

GBP
The Pound lost ground in yesterday morning’s session after retail sales including fuel came in significantly below forecast after fuel sales dropped 2.6 percent. The figure excluding fuel rose 0.4 percent from June due to a rise in spending in department stores along with furniture and household electrical appliances.

Low inflation and faster wage growth are helping to support consumer spending. Bank of England policy makers see price gains picking up at the end of the year after they crept back above zero in July.

USD
The weekly jobs figure from the US was again strong with the number of Americans filing for unemployment benefits last week remaining historically low.The subdued level of firings has been accompanied by falling unemployment and steady job gains, signs the labour market continues to heal in its seventh year of recovery. Bigger advances in wages will be needed in addition to the strengthened job security to help convince consumers to boost spending, which accounts for 70 percent of the economy.

The US also released a couple other major pieces of data, with existing home sales and the Philly Fed manufacturing index surpassing expectations. 

 

Key Announcements:

There are no key announcements today.