STO Fundemental - Oil going up? Kiwi rates to Hold, Euro and the Greek Debt Crisis

Once again the economic calendar is relatively subdued for the day ahead although UK retail sales figures could give some meaningful support to the rate hawks at the Bank of England.

The Traders’ View

Our prop desk is currently short Yen, Euro and equity index positions, with the S&P500 again attracting some notable interest.

Fundamentals – NZ data paves way for Kiwi rates to remain on hold.

New Zealand retail sales figures fell short of expectations last night, providing some welcome relief for the country’s central bank, helping support the idea that rate hikes certainly aren’t imminent. This has helped push NZD/USD further away from those one-week highs around 0.7240 and assuming the hawkish messages continue to come out of the US, this could well have the potential serve as the tipping point for a longer term decline on the pair.

UK retail sales data is due for release at 9.30am GMT and a notable snap back from the previous month’s decline has been forecast. This may help offer some support to cable - which has been struggling to make a sustained break above the 1.2500 level since the start of the month – as it backs up the idea that the Bank of England might not be able to maintain its lax monetary policy approach for that much longer, either.

We have the latest oil update metric due at 6pm GMT today in the shape of the Baker Hughes rig count, and this number has been edging higher with growth being posted for 14 of the last 15 weeks. Another build here will do little to provide any support for crude oil prices, with the US still actively filling the supply gap that has been left by other producer nations scaling back production in an attempt to bolster supply. News earlier this week suggested Opec could extend its production cuts, with conformation of this expected by May, but this acceleration of US production is certainly undermining the objective here and the risk seems to remain weighted on the downside with so much supply in the market.

The Euro could be looking vulnerable heading into the weekend break, with a deal over the Greek debt bailout scheduled for Monday. Yet again, Athens finds itself facing off against the German finance ministry, who have said that the only way Greece can cut its debts is by leaving the single currency. We’ve been here many times before and a compromise will more than likely be found, but tensions are going to be heightened in Germany with the elections looming and continued distributions to other parts of the Eurozone continuing to annoy the electorate – even if they have by all accounts done very well out of the imbalance in recent years.

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