Good morning

	High	Low			High	Low
EUR/USD	1.1417	1.1384		USD/ZAR	11.7469	11.6555
GBP/USD	1.5362	1.5341		GBP/ZAR	18.03	17.89
EUR/GBP	0.7437	0.7416		USD/RUB	63.70	62.00
USD/JPY	119.36	118.86		USD/NGN	202.1	199.5
GBP/CHF	1.4418	1.4298		S&P 500	2,101	2,098
USD/ILS	3.8665	3.8492		Oil (Brent)	62.66	62.05

Over the past few weeks we have spoken a great deal about Greece and the negotiations with Troika. Yesterday was BAD news. Today is slightly BETTER news. In other words the see-saw back and forth in favour of either party continues for now. As the saying goes (and I am changing it slightly to suit) “The pen is mightier than the talk”. Talk is easy, putting pen to paper is another story altogether. According to some news agencies, (today) Greece is going to request an extension of its current bailout on the basis of the framework of the Moscovici plan. According to sources the request will ask for a 4-6 month extension beyond its 28th February expiry in exchange of agreeing to certain principles. Greece would maintain eco reforms, continue to run primary budget surplus and pledge to pay its creditors in full (happy days). Greece would be given the leeway in deciding which reforms it would agree to. PM Tsipras yesterday announced two draft laws that clearly contravene the Moscovici plan. The Euro group rejected the EU plan and asked for an extension of the existing bailout package (its current terms). The rumoured divergence between the proposal of the EC and the Euro group suggests that a compromise is still possible but remains difficult (eg the latest Greek draft laws). One thing is for certain, the back room behind the scenes dealings are going on with a hope that an agreement will be reached. Newspapers (Telegraph: http://www.telegraph.co.uk/finance/economics/11418494/Grexit-fears-mount-as-Athens-leaders-refuse-to-accept-psychological-blackmail.html) have already started to write about the reality of GREXIT and the consequences. If the stock markets are a good sign of things to come then the latest news has been welcomed with open arms as European bourses open up positively (Germany, France, Italy +0.60%, UK +0.30% and Greece +4.25% as I write this). Grexit MUST NOT HAPPEN. I know it is going to be tough because like I said yesterday, if you start easing terms with one member, what is stopping other (EU) members (Italy, Portugal, Spain, Cyprus) coming forward and asking for the same terms to their packages. That will simply start a snowball effect that I tell could derail the EU as we know it. If that happens make sure you have stuffed your mattress with all your cash because the amount of casualties (banks) will be monumental. Financial armageddon. Ok enough with the bad news 🙂 ….

Puma (sports) announced results yesterday. While revenue was up, net profits were down because THEY NEVER HEDGED THEIR FX. as per their report, due to continued currency weakness in Turkey, Russia, South Africa, India, Japan and the Americas, sales declined by 5.8% in Euro terms. Perhaps Puma should have read PARITYFX’s research titled FX Services For SME’s and Individuals (The pitfalls to trading internationally) – Please let me know if you would like a copy!!! Now had they read that,  PARITYFX would have been able to advise Puma on their FX hedging and thus saving them not only THEIR MONEY but also the embarrassment of having to let the markets know their FD did not take due care to hedge the FX cash flow.

Other key developments today:

(1) The Bank of Japan kept its aggressive monetary policy in place (as expected) but upgraded its assessment of the economy by highlighting progress in industrial production and exports. We expect the weakness in the JPY to slow.

(2) January FOMC minutes. Will the Fed will drop the phrase “patient” in its statement. Further we will look for a description of metrics the Fed might use in making this decision. Rate hikes?

(3) BOE/MPC Minutes out at 9.30am.  The main focus will be on the vote count and whether the hawks are back. On the 5th Feb meeting attention was drawn to comments by the BOE recognizing the dangers of low/negative inflation and that they (the BOE) would be prepared to lower rates and ease rates further if needed. While initially this caused the GBP to wobble, Carney then emphasized that he still believes that the next interest rate move will be higher. EURGBP has been trading around 0.7420 (1.3477) so this morning’s minutes will be crucial as to the next GBP move.

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