Risk slips on Greecey oil

<p>The oil markets reversed the move higher seen on Tuesday with WTI closing down 8%, and intraday moves showing declines of 10% during the European/US […]</p>

The oil markets reversed the move higher seen on Tuesday with WTI closing down 8%, and intraday moves showing declines of 10% during the European/US session. The euro dropped back on to the 1.14 handle despite a weaker than expected ADP reading of 213k; lower than the expectation of 225k. Last month’s data was revised up to 253k which fits with the stronger December jobs report.

The single currency then tested the 1.13 level in the twilight zone of late New York and early Sydney, as the ECB tightened Greece’s access to cheap liquidity, banning the use of junk-rated Greek government debt as collateral for the regular central bank loans. The ECB decided to reverse a provision they had initially made to allow junk-rated Greek bonds as collateral as Athens looks set to renege on the agreed bailout programme.

Greek banks will now be forced to use the ELA programme (emergency liquidity assistance) which will put further strain on the banking system. The Greek finance minister is set to meet German finance minister Wolfgang Schäuble in Berlin today, who has already reiterated the stance of his boss Angela Merkel that Greece must continue to adhere to the current conditions agreed for the bailout.

In other news neither the AUD nor the CNH have reacted to the PBOC’s decision to cut the RRR (required reserve ratio) as the lifestyle currency also failed to be moved by Australian retail sales data that showed a below consensus outcome of 0.3%.

I expect the Greek saga to dominate proceedings today ahead of the US jobs report tomorrow with the BoE report likely to be a non-event ahead of the inflation report. The US trade balance will likely be a minor distraction.

 

 

EUR/USD
Supports  1.1300-1.1260-1.1100  | Resistance 1.1430-1.1535-1.1590

 

 

USD/JPY
Supports  116.50-116.05-115.80  Resistance  117.80-118.30-118.80

 

 

GBP/USD
Supports  1.5150-1.5080-1.4950 Resistance  1.5260-1.5290-1.5350

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