It's Greece again

"Little time left"
The Guardian newspaper shocked its readers with a revelation that the Bank of England is examining the implications of a referendum vote to leave the European Union. Surely it would be more newsworthy were the bank not to be making the study (even though investors seem not to care).

Perhaps the reason for that apparent lack of concern is that they don't think much of the euro in the first place. Over the long weekend and the eight-day week the single European currency was the weakest among the major currencies. It is down by two US cents from Friday's opening level and has lost two thirds of a cent to sterling. 

It was not so much the Euroland economic data that sent it lower: Two out of the three German business confidence measures were stronger than forecast and the only real statistical shortfall was an unexpected -0.1% monthly decline in Italian retail sales. The main reason for investors' disenchantment was a warning by the head of the European Stability Mechanism, Klaus Regling, that there is "little time left" to sort out the problem of Greece's solvency.

US inflation keeps rate hopes alive
Although the -0.2% rate of US inflation on Friday afternoon was a tick lower than analysts had predicted the other measures matched or beat expectations. Excluding the effect of food and energy, prices rose by 0.3% in April and were up by 1.8% on the year.

For once, investors looked though the headline inflation rate when assessing the consumer price index data. They decided that the 1.8% "core" figure was close enough to the 2% target not to pose an obstacle to the Federal Reserve's stated wish to increase US interest rates. The dollar moved a fairly rapid cent and a half higher against the euro and Cable dropped a cent.

Canada's inflation figures, announced at the same time, came in softer than expected with the headline rate at 0.8% and the core rate at 2.3%. On their own they might have hurt the Loonie but the inflation data were offset by stronger than expected retail sales, which went up by 0.7% in March.

US data dominate
There are no euro zone ecostats on today's agenda. New Zealand's trade surplus, announced earlier, was a touch bigger than forecast but imports and exports both fell in April so the Kiwi felt no benefit. The important numbers this afternoon will be US durable goods orders and new home sales.

This morning's overseas offerings are Swiss employment, South African unemployment and quarterly growth and Swedish factory gate prices. The CBI reports on May's UK retail sales.

It will be quantity more than quality with the US ecostats. As well as durable goods orders and new home sales there are figures for house prices, consumer confidence and a couple of provisional purchasing managers' indices. Although the durable goods orders figure is notoriously unpredictable, investors often use it as an excuse to get involved.