Oil prices eased after soaring to a 9-month high after Eurozone PMI missed expectations. Concern over weak economic outlook in the 17-nation region re-emerged, upstaged the newly approved bailout package to Greece and escalated Iranian tensions. The front-month contract for WTI crude oil moved within a narrow range of 105.62 and 106.41 ahead of US opening. The equivalent Brent crude contract also eased a bit.
Eurozone's PMI manufacturing index rose modestly to 49 in February but this missed market expectations of 49.4. In Germany alone, the index slipped to 50.1 in February from 51. The market had anticipated a rise to 51.5. The 17-nation services PMI fell to contractionary territory, slipping to 49.4 in February from 50.4 a month ago.
Tensions over Iran intensified as negotiation between IAEA and the Middle East nuclear power broke down. Iran refused to grant permission for the agency team to access to the military site at Parchin. Iran's supreme leader Ayatollah Ali Khamenei stated that 'the Iranian nation has never been seeking an atomic weapon and never will be' and 'the path of scientific development, particularly the nuclear field, should continue strongly and seriously'. He added that 'pressure, sanctions, threats and assassinations will not bear any fruit and Iran will continue its path of scientific development'.
The BOE unveiled in its minutes for the February meeting that Adam Posen and David Miles favored expanding asset purchases by +75B pound, compared with +25B announced after the meeting. The 2 dissenters to the current monetary policy saw a risk of a prolonged period of depressed demand which would cause inflation to fall materially below target in the medium-term. Also, the expected that further easing would alleviate the risks of increasing unemployment. The news raised speculations that the central may increase the amount of asset buying in May.