Greece optimistic for last minute deal with creditors
23/Jun/2015 • Currency Updates•
The Pound depreciated throughout the day on Monday despite a lack of announcements in the UK, although traded within a narrow band. Sterling ended the London trading session 0.25% lower versus the Greenback and 0.3% down against the single currency.
There was little in terms of economic releases in the UK yesterday. A report by the Federation of Small Businesses showed that there has been a strong improvement in business confidence in the past year. The report suggested that there had been a robust improvement in confidence, with growth and investment intentions reaching record highs since the survey began in 2010. Encouragingly, from the Bank of England’s perspective, productivity among small businesses is increasing.
This morning we’ll see the Inflation report hearings at the House of Commons at 10am. The rest of the week looks set to be relatively light in terms of economic announcements, with much of Sterling volatility likely to be driven by news elsewhere.
The Euro dipped against the Dollar yesterday, however, there was optimism in Greece as a deal, between the Greek Government and Eurozone creditors, could now be struck this week. Markets continue to mostly overlook goings on in Greece, with the Euro 0.4% lower against the Dollar.
All eyes on Monday were on talks between the Greek Government and Eurozone finance ministers at an emergency summit. Talks lasted a little more than an hour, as the country and its creditors discussed proposals on budget surpluses, pensions, and tax. These new proposals put forward by the Greek Government were deemed “detailed and credible” by the EU, with top Eurozone official Jeroen Dijsselbloem claiming the institutions would review with the aim of reaching an agreement later this week. This included concession on VAT and pension reforms, two of the main sticking points. Eurozone finance ministers are expected to meet yet again on Thursday.
Meanwhile, economic announcements were at a premium yesterday. Consumer confidence did, however, remain stable in June, unchanged at a reading of -5.6 despite concerns surround the situation in Greece. This was the first time in three months that the indicator hadn’t decreased on the previous month. Confidence was buoyed by a modest acceleration in economic growth last month, driven by an increase in consumer spending.
The focal point for the Eurozone will continue to be events in Greece. However, Markit will also be releasing its manufacturing and services PMI’s for France, Germany, and the wider Eurozone in early morning trading.
The Greenback gained against its major peers, notably the Pound, Euro, and Yen, finishing 0.3% higher in trade weighted terms.
There were a number of second tier economic announcements in the US as markets opened for the week on Monday. Sales of previously owned homes, known as existing home sales, regained momentum last month. Sales hit their strongest pace since November 2009, increasing by 5.1% to a seasonally adjusted 5.35 million in May, according to the National Association of Realtors. Equally encouraging, figures for April were revised upwards to 5.1 million. This was driven, in part, to first time buyers returning to the market and will be welcome news for the Federal Reserve hawks.
Meanwhile, the Chicago Fed activity index showed that overall economic activity came in slightly below average in May. The index, which represents 85 broad indicators of economic activity, rose slightly, although remained in negative at -0.17 for May, from -0.19 in April.
The main data release in the US today will be durable goods orders from the US Census Bureau at 1.30pm BST.