21 Jun 2015

Markets dominated by Grexit fears

United States Dollar: It was a fairly quiet day on Friday. There wasn’t much by way of economic data and traders were reluctant to place too many major bets as long as the Greek debt saga remained unresolved. That said the pound caught a bid as markets came to a close on Friday on the back of safe haven flow from EUR to GBP. GBP/USD came close to breaking through 1.59 but didn’t quite make it, but it did early this morning trading to a high of 1.5909. There isn’t much by way of major UK economic data due for release this week. From the US we have Existing Home Sales, Durable Goods and Final GDP. It goes without saying that the Greek headlines will likely dominate proceedings.

We expect a range today in the GBP/USD rate of 1.5790 to 1.5925

Euro: European officials are holding an emergency meeting today in order to try and reach some kind of agreement on the Greek debt situation. Greek PM Tsipras has made changes to reform proposals over the weekend, which is positive to a point, but the deadline for Greece to repay its loan and avoid default is fast approaching. EUR/USD was steady throughout most of Friday’s session as investors felt either confident that a deal will be struck or are taking the stance that any fall-out from a Greek default will be relatively palatable, certainly compared with the likes of the collapse of Lehman’s a few years ago. As crunch time fast approaches though – in terms of today’s meeting – investors are looking a touch nervy and are selling the single currency in early Europe. It’s dropped from 1.14 to 1.1330 already vs. the dollar and GBP/EUR is trading close to and around 1.40.

We expect a range today in the GBP/EUR rate of 1.3945 to 1.4030

Aussie and Kiwi Dollars: AUD/USD and NZD/USD have been sidelined to an extent since Friday. The kiwi continues to trade sub 70 US cents as the reverberations from last week’s RBNZ announcement continues to be felt. In fact, it’s fallen below .6900 a few times since Friday morning. Both currencies remain on the back foot vs. the pound too and GBP/AUD and GBP/NZD open at 2.0405 and 2.2975 respectively. Focus for AUD and NZD traders is well and truly on the Greek situation this week amid a lack of any high impact local economic data from either country. Chinese HSBC Flash Manufacturing PMI, released tomorrow night, might have some sway.

We expect a range today in the GBP/AUD rate of 2.0320 to 2.0520

We expect a range today in the GBP/NZD rate of 2.2880 to 2.3060

Data Releases

AUD: CB Leading Index m/m, HPI q/q

EUR: Eurogroup Meetings, Euro Summit, Consumer Confidence

GBP: No data

NZD: No data

USD: Existing Home Sales

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