Good morning

	High	Low			High	Low
EUR/USD	1.1327	1.1181		USD/ZAR	11.9040	11.8363
GBP/USD	1.5671	1.5619		GBP/ZAR	18.65	18.50
EUR/GBP	0.7232	0.7155		USD/RUB	49.78	48.75
USD/JPY	120.05	119.82		USD/NGN	199.2	198.9
GBP/CHF	1.4584	1.4481		S&P 500	2,137	2,127
USD/ILS	3.8620	3.8255		Oil (Brent)	66.49	65.48

After a period of consolidation on the stock markets, it would appear the USD is gearing up for further gains. I do not think this is the moment we will see the USD head towards PARITY but rather a “period” of USD strength. This strength has been aided by the apparent break higher in US stocks with rumours surfacing that a deal in Greece has been struck or is close to being struck. Greek Finance Minister Varoufakis said late on Monday in an interview on Greece’s Star TV Channel that the country is “very close” to a deal, while Prime Minister Tsipras noted “we are in the final stretch”. HOWEVER, caution is called for as the markets remain sceptical given past disappointments. If you cast your mind back a few days I wrote that there are 2 negotiations going on, one in front of the camera and the news you and I are reading daily, and the one’s going on in the backrooms where no cameras or notes are shared with the public. I will continue to write that GREXIT IS SIMPLY NOT AN OPTION and a solution/agreement will be found no matter how hard it is for either side. Of course Greece has the most to lose and will therefore have to concede “defeat”. However Greece’s creditors do not want to face the prospect of losing their investments, not to mention the financial ruin that will occur should Greece leave the EU. Therefore I am convinced the creditors will be giving Greece some slack and assistance. It is all about give and take with both sides having to concede to the other side to make sure everyone comes out satisfied.

The political fallout in Greece will be a bitter pill to swallow for the anti-austerity camp. But to survive one has to make concessions and accept change. There simply is no other option. When the news does break over the coming weeks and months that a deal has been agreed I would imagine the market will initially see this as a boost for the EUR, however that euphoria will likely dissipate when the markets reach resistance levels and the prospects of higher US interest rates. Let’s not forget despite the recent disappointing data out of the US ( Industrial Production and Retail Sales) the US interest rate curve still points to at least 0.50% rate hikes in 2015. Tomorrow sees the release of the FOMC minutes. We do not expect any major changes and continue to highlight the FOMC’s view that it views the recent disappointing data as transitory rather than something more long term.

Thursday sees the SARB (South Africa) announce their rate decision. We expect the SARB to hold rates at 5.75% for now.

Today 9.30am Ldn sees the publication of UK CPI numbers with 0.00% expected again. With the drop in oil and food prices there is now talk of the UK entering a period of DEFLATION.

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