Week Ahead: waiting uncomfortably for Greece to go

How much longer will Greece remain in the eurozone? On paper, events diarised for the week ahead will provide little indication of the country’s future. But that question – and its ramifications for the eurozone – will remain the dominant force shaping markets.

Added to the uncertainty over the eurozone’s future is Ireland’s referendum on Europe’s fiscal compact on Thursday, though polls point to a win for supporters of the treaty in the only country that is holding a vote on the issue.

‘Together with the usual chit-chat on a possible Greek exit and how to reform the eurozone, this has the potential to keep markets in a state of unrest,’ commented analysts at ING.

Other important data due in the eurozone include a first estimate of inflation in May, which due to be published on Thursday.

For more on a potential 'Grexit' read Snap! Greece goes and we’re awash with ‘worthless paper’ and 5 reasons you should worry about Greece and the euro

America’s (relative) strength

The biggest market-moving event of the coming week may not emanate from the epicentre of the world’s financial woes at all, but from its leading economic light: the US.

Friday’s US jobs data will be closely watched for signs of whether the world’s largest economy continues to show strength. The consensus among economists is for 148,000 new jobs to be created in May. This would be more than April’s disappointing 115,000, but fewer than the average between January and March.

If there is another weak outcome ‘this will presumably result in the market looking to increasingly price in QE3, against a backdrop of eurozone worries and fears over the scale of US fiscal drag next year,’ say the ING analysts.

Others note that the US is insulated, but not immune, from events in the crisis-struck eurozone.

Also in the US, GDP data for the first quarter of the year is due, as well as a gauge of consumer confidence, pending home sales data and the ADP employment survey. On balance, ‘the mixed bag of modest progress and minor setbacks will probably remain intact next week’ says Christoph Balz of Commerzbank, noting that the economy is still on track for moderate growth.

How are China and Brazil coping?

Amid growing concerns that China’s economy will slow down more than expected this year – but avoid a calamitous ‘hard landing’ as the authorities provide support – the official and final HSBC PMI data will be published and heavily pored over.

In Brazil another chunky interest rate cut is likely amid the threat posed to the Bric economy by the eurozone crisis. First-quarter GDP data will show whether the country’s economy continues to lag that of other faster-growing emerging markets, with India’s first-quarter GDP also due. Unlike China’s data though, these readings have little impact on developed markets.