Greek Debt Talks Resume
Later today, the CBI’s distributive trade survey will provide early cues on direction of retail sales for June. Despite the elevated consumer confidence and rising wage growth in the nation, markets anticipate the balance to decline for June following the strong reading in the prior month. Across the Atlantic, personal income and spending data for May and the flash reading of Markit’s PMI for the services sector in June, due later today, will provide fresh guidance on the growth prospects in the economy for the second quarter.
Meanwhile in Europe, the GfK survey on consumer sentiment highlighted the adverse impact the Greek crisis was having on consumers in the region. After the meeting of Euro zone finance ministers last night ended with no agreement, talks have resumed again today as a Greek default lurches closer.
Pound Sterling – UK Markets
This morning Sterling has recovered its early losses against the Euro and the US Dollar. The Confederation of British Industry’s distributive trade survey, scheduled for release shortly, will provide insights into retail sales for this month. The balance of retailers had indicated weakness in retail sales for April, while May had experienced a sharp increase in reading. Markets expect the reading for June to show an ease from the strong showing in the previous month. A positive surprise in the reading is likely to reignite hopes of notable improvement in GDP growth for the second quarter supported by robust consumer spending and rising income.
The Pound surged to the 1.58 mark against the US Dollar yesterday after approvals for home purchases rose, albeit less than expected, to the highest level since March last year, suggesting that housing activity will continue to improve in the coming months. However, the Pound – US Dollar currency pair stalled its upward rally and retraced back to the 1.56 mark later in the day. Markets now await the more comprehensive lending figures from the Bank of England, due early next week.
US Dollar – US Markets
The US Dollar has nudged lower against the major currencies this morning. Economic releases in the US, later in the day, are expected to reflect a bright growth outlook for the economy in the second quarter. The flash PMI reading for the services sector, which accounts for more than three quarter of US private sector GDP, is anticipated to show an expansion in business activity for June. An upbeat reading of the services PMI will strengthen views that the economy is on course to a healthy recovery. Additionally, personal income and spending data that precedes the PMI release is expected to be upbeat as well. Markets anticipate that the household spending figures will show considerable improvement for the last month, reflecting the surge in retail sales witnessed in May. Also of particular interest would be the weekly unemployment claims scheduled later today.
The US Dollar regained lost ground against the Pound yesterday after the third estimate of first quarter US GDP showed that economic slowdown early this year was less harsh than previously forecasted.
Euro – European Markets
German consumers appear more cautious heading into July. Survey data from market research group GfK showed earlier today that the nation’s consumer sentiment index came in slightly below market consensus. GfK indicated that uncertainty surrounding the consequences of a Greek departure on the German economy has fuelled concerns among consumers in Europe’s largest economy. The Ifo think tank had yesterday expressed similar concerns after German businesses were reported to have scaled back their economic expectations for June. The Euro surrendered its early morning gains against the Pound, following the release of the dismal survey data. Meanwhile, European officials have resumed discussions today to find a solution for Greece, ahead of a two-day summit of EU leaders that is set to commence later in the day.
The shared currency traded moderately higher against its key peers yesterday. The late night meeting of the Euro zone’s finance ministers yielded no result as the two sides failed to bridge their differences on reforms that the nation needs to embrace.
Other Currencies – Highlights
The New Zealand Dollar has trimmed its early session gains and is currently trading close to the 0.69 mark against the greenback. The New Zealand Dollar – US Dollar currency pair was initially trading on a stronger footing, even though the revised US GDP came in line with market expectations, showing a smaller contraction compared to previous estimates.
Traders in the currency pair look forward to the domestic trade data scheduled later today. Markets anticipate that the trade balance figures will show a wider deficit in May, led by an increase in imports. Meanwhile, in the US, investors will focus on the preliminary print of the nation’s service sector, a report on personal income and spending and weekly update on unemployment claims, scheduled later in the day, for further direction in the currency pair.