httpvh://www.youtube.com/watch?v=Q0A8RhonOBw

• EU to help Greece?
• Moody’s: UK “a long way” from ratings change
• US Retail Sales are better, recovery continues

It is rare that we see something positive about the state of the UK’s finances nowadays. Las t week we had rating agencies talking us down, balance of payments releases that showed that an export led recovery was unlikely and data that the manufacturing sector in the UK was once again in retreat.

But good news is what we have this morning in the form of a note from the ratings agency Moody’s. They say the UK is still a “long way away” from anything that would prompt a change in the ratings outlook. Of course this can be looked at from both sides i.e. we are a long way from getting a more positive outlook but the market has taken this as a GBP positive and moved sterling towards the highs of last week against the USD, JPY, AUD, CAD and NZD.

One notable absentee from that list is the euro. Over the weekend a bailout has been put together for Greece. Despite furious opposition by the public the Germans seem to have led the way on the package. It is likely that, although the value of the deal is roundly being touted at around EUR25bn, this may need to increase as Greece needs EUR55bn by the end of the year. The way the EU was set up prohibits bailouts so we believe that any provisions for Greece will be made via loans and loan guarantees through state-owned banks. The market is supporting the euro as a result at the moment or though we believe that will change over the course of the week.

We have a day of US data today with the main news being the industrial production figures at 13.15. other than that we have  New York’s manufacturing index figures (12.30), Net Long-Term TIC flows (13.00) and a survey of the housing market by the NAHB (17.00).