US markets hit new records late last night on reports that Greece was looking to revive a plan reportedly put forward by Pierre Moscovici, and which Greece found acceptable, which was rejected by EU finance ministers at Monday’s meeting. Why markets would take comfort from this is anybody’s guess, given that it seems unlikely that EU leaders would be minded to change their minds, but the plan proposes an extension of the current loan agreement plan within the framework of this proposed plan. Ultimately it seems markets are ignoring the hot air coming from Brussels and instead focussing on the fact that while the two sides are talking the European Central Bank is unlikely to hit the off switch on the ELA facility, which comes up for review today. While there is some concern that the ECB might suddenly turn off the taps they are unlikely to do so, unless given the wink by politicians from Brussels. ECB President Mario Draghi is unlikely to want to go down in history as the man who pulled the plug on Greece and undermine the “irreversible” nature of the euro. Only last week the ceiling was raised last week to €65bn to help Greek banks cope with deposit outflows, which have continued apace in the past few days. While the markets continue to obsess about the next move from Brussels, attention is also expected to turn to events in the UK and the latest Bank of England minutes as well as the latest unemployment and wages data With CPI inflation hitting its lowest levels in years at 0.3%. and likely to go even lower in the coming months, as we head towards the May general election, the focus is now shifting towards wages data for signs that the five year squeeze on incomes will ease further as we head towards polling day. Any sign that an improvement in the latest economic data could help with a more certain outcome in the May election will undoubtedly be well received by markets. The latest average earnings data for the three months to December is expected to remain unchanged at 1.7%, though it wouldn’t surprise if we saw a slight uptick. The latest unemployment data is expected to remain unchanged at 5.8%, while the latest jobless claims data for January is expected to show yet another decline of 25k. The latest Bank of England minutes are expected to be instructive in the context of the reversal of the votes of Martin Weale and Ian McCafferty to come back into line with the mainstream and keep rates on hold after five months of voting for a 0.25% increase. We’ve already heard from Bank of England governor Mark Carney that the bank expects headline inflation to remain low for some time to come, while Martin Weale reiterated at the weekend that rates could rise sooner than expected. With the Bank set to look through the headline number it suggests that markets could do well to not only keep an eye on wages, but also on core CPI which edged up a little yesterday from 1.3% to 1.4%. It’s also central bank minutes time in the US with the release of the latest and first FOMC minutes of 2015, where we should get an insight into the discussions of the new voting members of the committee, and whether there was a discussion about the effects of a stronger US dollar. The last Fed statement made reference to concern about “international developments” which many interpreted to be concerns about events in Europe, and Greece in particular, however it could just as easily also have been referring to concern about the growing risk of deflation risks leaking out of China, across Europe and into the US. Is there a concern among Fed officials that the deflationary wave sweeping across the globe could start to cause the Fed to miss its inflation target and delay the expected rate hike which most think is coming this summer? EURUSD – the euro continues to be fairly well supported on dips finding support at 1.1320 earlier this week, we’ve seen a move towards 1.1450 but have still come up short of the highs this month at 1.1530. This remains the next target on a move through 1.1460. Range support remains down near 1.1270, with larger support at the 1.1205 level. GBPUSD – currently finding some support at 1.5320 trend line support from the February lows, but while we remain above 1 5280 the risk remains for a move towards the 1.5500 area. Only a move back below the 1.5280 area argues for a move back towards 1.5200 and a retest of the 1.5000 lows this month. EURGBP – this week’s failure just below 0.7460 keeps the pressure on the downside and support at 0.7370, with a break lower targeting the 0.7250 level. While below interim resistance at 0.7460 the downside pressure looks likely to be maintained. USDJPY – currently rebounding from the 118.20 level, if we stay below 119.80 then we could well see a resumption of the recent down move, and a return towards the 117.00 level. The sharp reversal at the 120.50 level throws the potential for further upside in doubt. CMC Markets is an execution only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. 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