Top Stories
- Markets in suspended animation ahead of Greek vote ZEW disappoints
- BoE's Fisher - 'QE still on the table"
- Nikkei 1.13% Europe up 1.11%
- Oil at $94.64/bbl
- Gold at $1545/oz.
Overnight Eco
- JPY All Industry Activity Index (MoM) (APR) 1.5% vs. 1.9%
- EUR German ZEW Survey (Economic Sentiment) (JUN) -9.0 vs. -1.7
- EUR Euro-Zone ZEW Survey (Economic Sentiment) (JUN) -5.9 vs. 9.4
- EUR German ZEW Survey (Current Situation) (JUN) 87.6 vs. 91.5
- GBP Public Sector Net Borrowing 15.2B vs. 16.1B
Event Risk on Tap
- USD Existing Home Sales (MAY) expected at 4.85M
- USD Existing Home Sales (MoM) (MAY) expected at -4.0%
- CAD Leading Indicators (MoM) (MAY) expected at 0.6%
- CAD Retail Sales (MoM) (APR) expected at 0.6%
- CAD Retail Sales Less Autos (MoM) (APR) expected at 0.5%
Price Action
- USD/JPY bounces off 80.00
- AUD/USD drops below 1.0600 in rangebound Asia trade
- GBP/USD pressured below 1.6200 on dovish Fisher comments
- EUR/USD steady at 1.4350 ahead of Greek vote
@import url(/css/cuteeditor.css); EUR/USD held its ground for most of Asian and early European trade ahead of the crucial confidence vote by the Greek Parliament but came under some selling pressure in morning European dealing after weaker than expected ZEW data raised fears of a slowdown in German growth. The pair spent most of the night in a state of suspended animation as traders awaited the resolution of the political drama in Greece with the vote scheduled for 21:00 GMT.
As we noted earlier, “At this point the market anticipates that Mr. Papandreou will survive tonight’s no confidence measure although he has a majority of just five in the parliament of 300, and one member of his party has already decided to vote against him. Even if the Papandreou government survives and the austerity measures are passed by the Greek Parliament, the credit crisis may face challenges on economic grounds with the German Banking Federation now demanding better incentives before exposed banks are asked to extend repayments on their existing Greek debt.”
On the economic front the ZEW survey data disappointed printing at -9 versus 3.1 the month prior as it plunged into negative territory for the first time since October of 2010. The combination of concerns over sovereign debt defaults and weakening economic data helped to push the ZEW lower as investor sentiment soured in June. The news sent the EUR/USD to fresh European session lows of 1.4320 but the single currency stabilized as all eyes remained firmly fixed on Greece. The euro is likely to see good two way flow ahead of the announcement, but may sell off in the aftermath of the news even if Greece ratifies the austerity measures as it has anticipated much of the positive outcome. If on the off chance the Papandreou government falls, the ensuing chaos could easily send the pair towards the 1.4000 figure as the prospect of a Greek default will suddenly become very real.
Meanwhile in UK dovish comments by BoE policymaker Paul Fisher sent cable through the 1.6200 level in morning London trade despite slightly better PSNB data. Mr. Fisher told a Euromoney conference that he may consider an expansion of QE if deflation were to materialize. "If we saw export growth fall back because of some world contraction in demand we really would have very weak domestic growth and that would put downward pressure on inflation," Fisher said during questions following a speech.
Mr. Fisher’s comments reveal that doves remain firmly in control of the MPC and that tomorrow’s BOE minutes will likely confirm that fact, weighing on the pound. The BOE monetary policy remains stationary and if anything, has moved closer to easing rather than tightening as economic growth in UK remains lackluster. Cable therefore continues to be vulnerable to further selloffs with 1.6000 possibly coming into view over the next several sessions.
In North America today the eco calendar remains light with only Existing Homes on the docket. The market anticipates dismal data with the annual run rate projected to decline to 4.82M units versus 5.05M the month prior as the housing market shows no signs of life. However any impact from the calendar is likely to be fleeting as the focus remains firmly on Athens for the rest of the day.
FX Upcoming
| Currency | GMT | EST | Release | Expected | Prior |
| USD | 14:00 | 10:00 | Existing Home Sales (MAY) | 4.85M | 5.05M |
| USD | 14:00 | 10:00 | Existing Home Sales (MoM) (MAY) | -4.0% | -0.8% |
| CAD | 12:30 | 8:30 | Leading Indicators (MoM) (MAY) | 0.6% | 0.8% |
| CAD | 12:30 | 8:30 | CAD Retail Sales (MoM) (APR) | 0.6% | 0.0% |
| CAD | 12:30 | 8:30 | CAD Retail Sales Less Autos (MoM) (APR) | 0.5% | -0.1% |
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