Greek Official to Meet with International Creditors

Greek Prime Minister Alexis Tsipras

Greek Prime Minister Alexis Tsipras told Jeroen Dijsselbloem, chairperson of the euro region finance ministers that Greek officials will meet with representatives of the International Monetary Fund, European Commission and European Central Bank tomorrow.

Dijsselbloem divulged that he will request these institutions to discuss with Greek leaders technical evaluation of mutual agreement between the existing program and Greek proposal. This can facilitate important talks between the finance ministers on Monday.

The turnaround of Tsipras can be the first step toward resolving the Greek controversy that can produce more financial unrest.

Officials in Athens see this as a positive development leading to a new pact with the nation’s creditors.

The step forward took place after the governing council of the ECB prolonged cash support to Greek commercial banks for one more and granted additional 5 billion euro in terms of emergency lending assistance by the central bank. The council also opted to examine the program on February 18.

The ECB consented to provisional funding appropriate for banks when it ceased to accept government bonds from Greece in exchange for liquidity.

Meanwhile, German Chancellor Angela Merkel said she was ready for a concession with finance ministers having some more time to mull over proposals from Greece prior to their meeting on Monday.

Tsipras has reportedly not agreed to meet with the three agencies but with a group labeled as the Euro Working Group.

EU leaders believe Greece must show consideration for budget discipline and commitments to economic restructuring if it expects continuous aid.

ECB policy makers opined official loans are covered by extended maturities, reduced interest rates and interest repayment cessation. Hence, rescheduling is not going to help Greek funds in the interim.

UK Pound Sterling Increases

The UK pound sterling gained versus the US dollar following the Bank of England’s statement that inflation will possibly drop to zero within the first six months of 2015. It also said there is no risk of deflation in the United Kingdom.

BOE Governor Mark Carney cited decreasing oil prices will turn out positive for the country’s economy with wages expected to increase at the fastest pace in more than 10 years. 

The central bank anticipates inflation to climb above the two percent target in two years and go up above that goal after three years in case interest rates mount as expected by markets.

The pair of GBP and USD moved up 0.65 percent from 1.5226 to 1.5334 sooner than the inflation data.

The BOE is mulling over reducing interest rates below 0.5 percent if inflation ventures deeper into negative territory.

It also raised the growth projections for 2015 from 2.6 percent to 2.9 percent and looks forward to a growth of 2.9 percent by 2016.

The pound was near seven-year highs versus the shared currency with EUR and GBP down 0.61 percent from 0.7447 to 0.7392.

Stock Index Futures in US Trim Gains

US capital stocks scaled down gains after the regression of larger than forecasted retail sales which made up for optimism over the Ukraine break in fighting.

S&P 500 contracts that will terminate next month put in 0.4 percent to 2,073.40 at the New York Stock Exchange. It cut down a previous gain of 0.6 percent.

Standards & Poor is one percent away from the record reached last December while NASDAQ Composite Index was roughly five points from close to a 15-year peak.

US retail sales also dropped more than the projections made last month.

The 0.8 percent slump came after the 0.9 percent descent decrease in December.

Separate figures disclosed applications for jobless benefits climbing to a point consistent with labor market progress.

Equities reached record levels for the first time this year which was augmented by the most significant three-month increase in hiring within 17 years. S&P 500 recovered 3.7 percent this month after plunging 3.1 percent last January.

US stocks traded in very tight ranges since 2007 which was distinguished by an exceptional high of 2,090.57 and low of 1,972.74.

Investor outlook was influenced by factors such as possible stagnation in the euro region and possibility of deflation.

With S&P trading at 17.4 more than the expected revenues, investors are evaluating revenue reports together with economic statistics to assess stock valuation. The fall in crude prices encouraged analysts to reduce profit estimates for energy firms while total projections for the first quarter scaled down in six years.

Venezuela Bonds Plunge

US dollar-denominated bonds in Venezuela took a dive after the Venezuelan government declared a new FOREX platform which seemed inadequate to put an end to current economic issues.

The Organization of Petroleum Exporting Countries has opted for the SIMADI. It is a free-floating foreign exchange tool with tri-layer exchange regulatory system designed to augment state funds.

Venezuela is confronted with likely funding gaps this year and indebted to foreign investors holding US dollar accountabilities.

An emerging market debt analyst sees the urgent need for this Latin American nation to plug a $14 billion cavity in its financial books to settle obligations. There is even the probability that it go up to more or less $26 billion next year.

According to government critics, modifications in government’s currency control program of more than a decade failed to take away two immensely over-valued currency exchange rates. This restricts the government's capability to set aside hard currency in the midst of the decline of crude oil earnings.

Government debt plummeted since the new program failed to impress markets. The Global 2027 Venezuelan bond decreased 3.49 points to bid at 40.005 and pushed yields to 25.12 percent.

Bonds of the state-owned oil firm also fell and benchmark 2024 bond diminished 1.36 points in to bid at 32.64 with an almost 25 percent profit.

The crash of oil prices left the country's state-led model built by the late President Hugo Chavez coping with recession.

Venezuela's bonds are now trading at distraught levels with yields paying 27 percentage points more than US Treasury bills because of fears of potential default.

Nonetheless, the government maintains it can settle all international debt commitments without reducing social expenditure plans or abandoning its FOREX control platform.

Gold Predicted to Slide

Hedge funds have pushed the net-long positions of gold to levels which have not been realized for nearly two years. There are also conflicting opinions on what will happen to this valuable metal for 2015.

Speculators purchased gold for the fourth straight week aggressively while silver was bought for nearly 12 weeks although the position has not been extended, based on data provided by Bank of America (Merrill Lynch).

The bank announced indicators imply investors are upbeat for precious metals. This point of view is propped up by investment banks and economists. Yet, targets where gold will end up by the end of the year are contradictory.

Gold prices went up more than one percent last week and topped $1,300 for every troy ounce for the very first time going back to the third quarter of 2014.

Commodity analysts are convinced high gold trading is related to the raised projections for 2015 gold bullion prices to the middle $1,200s level from the $1,220 estimate at the end of last year.

Gold recovered after losses following the weakness of the US dollar and equities. Gold futures for settlement in February climbed nearly $15 to sell at $1,295 per troy ounce.

China Inflation Drops to Five-Year Low

The yearly consumer inflation rate of China hit fell to a five-year trough last month while factory deflation even aggravated.

This stresses the country’s intensifying economic weakness and puts pressure on policymakers to infuse additional stimulus to fortify growth.

Threats of deflation are increasing for the second-biggest economy in the world because of the property sector’s dip and prevalent factory congestion aggravated by doubtful global outlook and sliding prices of commodities.

Beijing has to provide additional policy support after the National Bureau of Statistics announced that the country’s CPI increased 0.8 percent in January. This was the weakest report since of November 2009.

Chinese economists believe that factory depression continues to be a sizeable worry.

Producer price index decreased 4.3 percent in January which is more than the 3.8 percent plunge predicted by analysts. Price cuts have already undermined the profitability of local manufacturers.

The People’s Bank of China is perceived to relax policy some more following its move to cut down bank reserve preconditions for the first time after more than two years. It can be a protective action versus capital outflows.

Stock indexes in the mainland rose approximately one percent after this data was released.

Meanwhile, the surged of food price rises waned from 2.9 percent last December to 1.1 percent in January and contributed to approximately 80 percent of inflation decline.

Consumer prices went up two percent in 2014 which is below the goal of 3.5 percent as deflation fears worsened.

Beijing may reduce GDP targets to seven percent in 2015.

US and Japan Talk FOREX

The finance ministers of the United States and Japan both reiterated that monetary policies of nations must not be formulated to manipulate FOREX rates.

Secretary of Treasury Jack Lew and Finance Minister Taro Aso were firm on this stand, sources from the US government said.

In the past, Group of Seven finance chiefs agreed that monetary measures should bolster domestic economies without homing in on currency rates.

The two officials said they conform to accords made by the G-7 in relation to exchange rates during the Group’s meeting in Istanbul, Turkey.

They met during the breaks of the two-day Group of 20 finance leaders’ conference.

However, this was initially denied by the Japanese delegation even as the US Department publicized details about the meet.

The two ministers dealt with the currency issue at the point when denigration is increasing in Congress that monetary easing by Tokyo is being utilized to reduce yen’s value against the US dollar.

The US Department of Treasury said they also discussed the global economy’s performance and progress in conciliation for the free trade scheme of the Trans-Pacific Alliance wherein both countries are involved.

The 12 countries belonging to this bloc are hoping to settle the concord which will include 40 percent of the international economy.