And on it goes

ECB steps up for Greece
At his press conference yesterday European Central Bank president Mario Draghi insisted that, throughout the negotiations with Greece, he never doubted that the country would remain within the currency union. In so saying, the Italian dispelled any notion that he is an heir of Geppetto. 

Sig. Draghi confirmed that the ECB would extend its Emergency Liquidity Assistance to Greek banks. He also said that he had no doubt that the €3.5bn due to the bank on Monday would be repaid. His confidence presumably arises from the knowledge that the EC will provide Athens with a bridging loan so it can make the repayment. And so the money-go-round spins on.

There was no reaction to Sig. Draghi's comments: between the beginning and the end of his presentation the euro moved no more than a dozen ticks. It was however - jointly with the Swiss franc - the weakest performer on the day, losing a third of a cent to the US dollar and half a cent to sterling. 

Carney stirs again
Two days after his warning to parliament that the first Bank Rate increase "is moving closer" the Bank of England governor gave further encouragement to sterling's supporters. His comments came too late for London to react but they may spark some movement this morning.

In a sermon at Lincoln Cathedral, celebrating the 800th anniversary of Magna Carta, Mark Carney told the congregation that "the decision as to when to start such a process of [interest rate] adjustment will likely come into sharper relief around the turn of this year". Not unreasonably, analysts took it as an indication that the first rate increase could come in December or January.

Maybe with a nod to Greece and the euro zone Mr Carney qualified that outlook with an acknowledgement that "shocks to the economy could easily adjust the timing and magnitude of interest rate increases". Nevertheless, the governor clearly expects rates to be higher in the new year and that should help the pound. It didn't go far yesterday, remaining unchanged on average, but has scored across-the-board gains over the last seven days.

US inflation and Greece
With the exception of the widely-ignored Euroland construction output numbers there are no economic statistics from Europe today. After lunch the inflation data from Canada will be of little interest following Wednesday's BoC rate cut. The US inflation figures will be of rather greater significance.

Like Mr Carney, the US Federal Reserve chief sets great store by the economic data when it comes to setting monetary policy. At the predicted 0.1%, today's headline inflation figure is unlikely to get the sap rising in dollar bulls but a higher number might.

It is hard to imagine what might set the euro bulls on fire. The past few days have taught that Sunday night's "agreement" was really nothing of the sort and that the negotiations still have a long way to go. Have a panic-free weekend.