The just released survey data indicated that the expansion in Britain’s manufacturing activity was lower than market consensus for June, with the PMI dropping from May’s level, hurt by a combination of strength in domestic currency and weak business investment. Across the Atlantic, the June ISM manufacturing report later today is keenly anticipated to gauge the level of activity in the nation’s industrial sector. Also in focus will be ADP employment data.

In Europe, the final PMI numbers confirmed that Euro zone factory growth picked up slightly in June, in line with expectations. Meanwhile, Greece has become the first advanced nation to miss an IMF payment, but hopes of a new deal have resurfaced after Euro group officials agreed to discussions for a new bailout programme.

Pound Sterling – UK Markets

The Pound is trading lower against the US Dollar and the Euro after data showed that growth in the UK’s manufacturing sector slowed unexpectedly for June. The sector expanded at the slowest rate in more than two years, led by weakness in the nation’s exports. Recent manufacturing surveys have shown a cooling of growth in factory activity as strength in the Pound continues to dampen demand for exports. Traders will now await indications from Friday’s release of activity in the services sector, which forms a bigger share of the UK economy, for a view on economic growth in the second quarter. The BoE Governor Mark Carney will shortly present the Financial Stability Report, which is likely to highlight risks emanating from the Greek debt crisis.

The release of upbeat first quarter growth numbers in the UK yesterday had limited impact on Sterling and the Pound–US Dollar currency pair traded in a close range, with the greenback receiving support from intensifying concerns surrounding the Greek debt crisis.

US Dollar – US Markets

Last week, the Markit flash manufacturing PMI reading had revealed that industrial sector activity in the US grew at a slower pace for June, but had showed robust gains in the employment component. Against this backdrop, market participants will analyse the ISM and the final print of Markit manufacturing PMI due later today to ascertain how the labour and new order components fare in today’s economic releases. In addition, the ADP private payrolls report for June will attract market attention today, ahead of the key non-farm payrolls data scheduled tomorrow. Investors expect the private sector to add more than 200K jobs for June, thereby providing relief to the Federal Reserve as labour market health forms a major basis in deciding the future trajectory of interest rates in the world’s largest economy.

The US Dollar reversed some of its earlier losses and traded higher across the board yesterday. The Conference Board’s gauge of consumer confidence surged higher than market consensus for June, adding to signs that the US economy is back on a firmer footing after a dismal start this year.

Euro – European Markets

The shared currency came under renewed pressure yesterday, as Greece set the path for a potential exit from the currency union. The Euro slipped well below the 1.12 mark against the US Dollar after Greece failed to repay €1.6 billion to the International Monetary Fund, becoming the first developed nation to default. Additionally, Euro zone's bailout programme for Greece expired last night, deepening fears about the latter’s future in the Euro region. However, Euro group officials later stated that they will have discussions today to consider Greece’s latest proposal for new bailout aid which was submitted hours after the nation’s international bailout expired.

The Euro–US Dollar currency pair is hovering close to the 1.11 mark, post the release of manufacturing numbers from the Euro zone and its various economies. Manufacturing PMI in Italy fell below market expectations for June, while the final prints in France and Germany showed expansion in manufacturing sectors. In the Euro zone, the final PMI numbers confirmed stronger factory activity in June.

Other Currencies – Highlights

The Japanese Yen, which initially traded higher against the US Dollar in the morning Asian session, has given up its gains and is currently trading lower. The latest Nomura/JMMA survey report showed that Japan’s manufacturing sector barely managed to remain in expansion territory for June, despite a strong pick up in export orders. The survey data indicated that aslowdown in production growth and a decline in new work orders was primarily due to a reduction in capital investments and challenging economic conditions. Meanwhile, the Tankan measure of manufacturing activity came in stronger than market forecasts, for an unchanged reading for the second quarter. Additionally, survey data showed a sharp improvement in sentiment among large manufacturers for the current quarter on the back on strong earnings.

Traders in the US Dollar–Japanese Yen currency pair now look forward to cues about the health of the US economy from releases in the US later today.