Greek crisis in focus
The Confederation of British Industry’s trends expectations survey on order growth and selling prices, scheduled today, is anticipated to show a pickup in activity in the manufacturing sector. In a relatively quiet week by way of domestic data, a report on loan approvals for home purchases scheduled tomorrow will attract some market attention.
Meanwhile, Euro zone ministers have asked for another round of talks on hopes of finalizing a Greek bailout deal this week. In addition, a flurry of flash PMI readings showed that economic activity in the Euro zone and its two largest economies accelerated in June. Across the Atlantic, reports on new home sales, durable goods orders and the first print of this month’s manufacturing PMI is up for release later today.
Pound Sterling – UK Markets
The Pound has added to losses against the US Dollar this morning, pushing the currency pair below the 1.58 mark. Meanwhile, investors look forward to the Confederation of British Industry’s (CBI) survey on industrial trends, which is scheduled shortly, and on the retail distribution sector later this week, for cues on the performance of the economy in the second quarter. Recent positive developments in the UK, including stronger than expected retail sales, a surge in wage growth and a hawkish tone in the June BoE monetary policy meeting indicate that the slack in the economy witnessed in the first quarter has narrowed and is steering markets towards expecting a rise in interest rate before the end of the year. The CBI’s business surveys this week are anticipated to further spark expectations of a tighter monetary policy if they show better than anticipated readings.
Sentiment towards Sterling weakened across the board in yesterday’s trading session and the Pound to US Dollar currency pair surrendered early session gains in the absence of any notable economic releases in the UK.
US Dollar – US Markets
The US Dollar is trading on a firmer footing against the majors this morning, ahead of a string of US economic releases including durable goods orders, manufacturing PMI and new home sales later today. While markets anticipate a slight rise in today’s core orders, however the goods orders reading has confounded market expectations over the year and traders will keep a close eye on the print. A preliminary gauge of manufacturing activity later today will provide further cues about the performance of the sector this month. If today’s forecasts for durable goods orders and manufacturing activity hold up, it would rebuild confidence among traders that the industrial sector is on track to recover following a challenging period at the start of the year.
Sales of previously owned homes in the US for May surged to the fastest pace since November 2009, suggesting that the US residential market is on course to recover on the back of firmer demand. Markets expect a similar upbeat tone in today’s new home sales numbers for May.
Euro – European Markets
The shared currency has plunged against its key peers this morning despite upbeat economic data. Investors keenly await the outcome of the negotiations on the Greek debt deal. Euro zone’s preliminary PMI showed expansion in manufacturing and service sector activity, touching a four year high, as the region begins to recover on the back of aggressive quantitative easing measures and low interest rates. The upbeat reading also found support from the preliminary manufacturing readings of Euro zone’s second and third largest economies that continued to look encouraging despite the crisis in Greece having possibly dented sentiment across the Euro zone. The flash PMI numbers showed that factory activity in Germany and France picked up, edging higher than market expectations for June.
Yesterday, the Euro had moved above the 0.72 mark against the Pound after the Euro zone leaders sounded hopeful of sealing a deal this week with Athens following new proposals for reforms put forth by the Greek government.
Other Currencies – Highlights
The Australian Dollar came under some pressure earlier today after Conference Board’s leading index registered a drop for April. In addition, house prices in the nation continued rising in the first quarter though the gain was slightly lower than market expectation. Data showed that house price growth was largely driven by strong gains in the Sydney housing market. However, home prices in regions that are rich in resources have dropped on account of the recent collapse of iron ore prices and weaker investment in mining activity in Australia. The nation’s central bank has repeatedly expressed concern about an overheating housing market in Sydney. The Australian Dollar has recovered after the sharp initial fall is currently trading in a narrow range against the US Dollar.
In the day ahead, a set of US economic releases including durable goods orders, manufacturing PMI and sales of newly built homes is expected to keep the traders in the Australian Dollar-US Dollar currency pair busy.