Euro Flip-Flops on Greece, Sentiments Boosted by China Elsewhere

Euro continues to flip flop against dollar with a soft tone on news from Greece. On the one hand, it’s reported that the EU group meeting will be replaced by a conference call as final details regarding the Greek bailout plan are not yet ready. According to Jean-Claude Juncker, the change was due to the situation that ‘there weren’t sufficient elements of consensus to be sure that a meeting would be successful’. He also noted he has not yet received the required political assurances from the leaders of the Greek coalition parties on the implementation of the program. On the other hand, after the change on the EU meeting, it’s reported that political leaders from Greece would promise to implement the austerity Wednesday. The news helped DOW staged a late rebound to close nearly flat and set the stage for strength in Asian equities.

In Asia, sentiments were generally lifted as China pledged to invest in European bailouts. Chinese Premier Wen Jiabao said yesterday at a joint press conference with EU President Van Rompuy that “China is ready to get more deeply involved in participating in solving the European debt issue.” This is echoed by PBoC Governor Zhou xiaochuan today as he said that “China will always adhere to the principle of holding assets of EU sovereign debt” and “would participate in resolving the euro debt crisis”. This is seen as a commitment from China that at least it won’t be cutting European bond holdings and would instead look for opportunities to invest more.

Data released today so far is positive with New Zealand retail sales rose more than expected by 2.2% qoq in Q4 while Australia Westpac consumer confidence rose 4.2% in February. A number of key economic data will be released today included Q4 GDP data from Eurozone countries, UK job data, BoE inflation report, Swiss EW, US manufacturing data as well as FOMC minutes. Be prepared for a busy ride!

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