Euro suffers on the back of renewed fears over Greek default

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Yesterday saw a lot of volatility in foreign currency exchange and equity markets, but with the exception of the Eurozone, where there was an aggressive sell-off of stocks, there was little direction. The selling of stocks was due to fears of a Greek default which weighed on market sentiment and kept the Euro on the back foot. This is despite the moves we saw from the Swiss National Bank last week who stated they would buy Euro and sell Swiss Francs to defend the Swiss Franc from strengthening below €/CHF 1.20.

With the Euro v Swiss Franc exchange rate currently trading around €/CHF 1.2035, the Swiss National Bank's mettle is going to be tested to see how vigorous their actions are going to be. 

There is also speculation amongst the interest rate markets that the European Central Bank will reverse recent interest rate hikes with the "core"' strong economies of Germany and France showing increasing signs of slowing down. One outcome of all this Eurozone action is going to be greater volatility as the sovereign debt crises unfolds. 

After yesterday's barren data calendar, today's features UK house prices for July, the trade balance for July and the main event - the release of August's consumer price inflation (CPI) figures which could rise once again as increases in gas and electricity bills continue to increase. 

We are heading towards the peak of 5% year-on-year from the fourth quarter of last year which may prevent the Bank of England from making any moves on interest rates/monetary policy for the near term. 

Elsewhere, the markets will look to official comments from the Eurozone and US for signs that further monetary loosening as German Finance Minister Schaeuble, MPC member Posen and St Louis Fed President Bullard all due to speak today.