Later this evening it is to be hoped that we will see the first stages to a conclusion of the long running Greek debt swap saga with the likelihood that Greece will have to trigger the newly installed collective action clauses (CAC’s) and be the first European sovereign country to default on its debts.

A minimum of 95% of all bondholders must accept the terms for any deal to be counted as “voluntary”, and early indications suggest that this number will fall short.

If the CAC’s are invoked then the International Swaps and Derivatives Association (ISDA) will have no choice other than to declare a default, or run the risk of causing a run on the rest of the European bond market, and destroying the credibility of the CDS market.

Today’s Bank of England rate meeting will be the third anniversary of the current low interest rate policy introduced in the wake of the financial crisis in 2009. Having increased the current asset purchase program by £50bn last month the meeting isn’t expected to offer up any surprises with rates set to remain at 0.5% and the asset purchase scheme set to remain at the current £325bn. With economic data showing signs of improving some MPC members are starting to lean away from further easing, thus raising the bar for any further stimulus in the coming months. As such the minutes later in the month will be closely scrutinised for evidence of these types of division.

Forty five minutes later the monthly European Central Bank rate meeting is also likely to hold rates at their current 1% level despite this week’s economic data out of Europe being what can only be described as horrid. Yesterday’s German factory orders data for January slid sharply by 2.7%, which was well below the expected 0.6% rise, while other data out of Italy, Spain and France this week has been equally disappointing, suggesting that the Eurozone is falling into a double dip recession.

If yesterday’s factory orders data is any guide the latest German industrial production for January could well be similarly disappointing with expectations of a rise of 1.1%.

None of this is likely to persuade ECB President Mario Draghi to cut rates from their current levels, especially as the ECB has just pumped €1trn of three year liquidity into the banking system in Europe in the last three months.

Even so his press conference will make for an interesting spectacle and it is likely that he will say that the ECB can do no more with respect to additional measures, given the current size of its balance sheet.

In the US yesterday’s ADP numbers have raised expectations that the latest US jobs data due this Friday will continue to point to a US economy slowly pulling itself off the floor. Today’s latest weekly jobless claims it is hoped will continue this trend and come in near enough unchanged from last week’s 352k and 351k.

EURUSD – the yesterday’s euro price action was contained within a fairly small range with support at 1.3095 and 1.3160 the previous support level and 38.2% Fibonacci retracement of the 1.2625/1.3490 up move. The next target remains for a move towards the 50% level of the same move at 1.3050, as well as the February lows at 1.2975.
We could see the single currency push back the 100 day MA at 1.3290 which remains a key level while the 4 hour charts remain oversold.
There remains a risk of a rebound back towards 1.3370, which is the breakout level from the double top formation at 1.3490.
Only above the 1.3490 level negates the bearish set up and argues 1.3630.

GBPUSD – the cable has so far found support around the 1.5700 area and 100 day MA, however the bigger support level remains at the February lows at 1.5645 as well as the 55 day MA at the 1.5660 area. If this level were to break we could well see further sharp losses towards 1.5530 and 1.5420. Pullbacks should find resistance at or around the 1.5830 area.

EURGBP – the euro continues to drift higher from the bottom end of its recent range but just above trend line support at 0.8305 from the January lows at 0.8220.
Despite this slow glide up further downside pressure continues to be the dominant theme; but we could see pullbacks towards the 0.8400 level. A move through the 0.8300 level retargets the January range lows at 0.8220.

USDJPY – despite dropping to the 80.60 area yesterday the subsequent rebound has seen the yen poke its head back above the Ichimoku cloud and above 81.00 again.
Last week’s low at 80.00 should act as support if we get there as should the bottom of the cloud at 79.65.
The weekly close above the Ichimoku cloud resistance at 81.00 remains a positive indicator for further gains and needs to close the week above 81.00 for the scenario to remain intact for a move to 82.85.