There has been talks of a German and France rescue package for Greece, but all things considered, there is still a tremendous degree of uncertainty surrounding the Greek economy ad other economies at risk of being infected by the Greek debt crisis within the Eurozone. There has also been a lot of talk in the market of some major league hedge fund portfolio managers now committing to long-term short Eur/Usd positions with an objective that sees the major returning to parity. South Korea has added to the USD supportive environment after saying that the buck will likely remain the world’s leading reserve currency for the next 5-10 years. Germany’s Merkel has not helped the Euro’s cause after saying that the single currency is facing its most difficult phase since inception.
On the data front, Australian results were mixed, with the current account coming in weaker than expected, while new home sales were much better. Elsewhere, in the UK, the Hometrack housing survey came out showing a solid improvement from the previous numbers to put in its first rise in almost 2 years. However, the data was somewhat mitigated by comments from Hometrack that the data was in no way an indication that the housing market was poised for a boom.
Looking ahead, German import prices (0.7% expected) are due at 7:00GMT, followed by Swiss PMI (56.0 expected) at 8:30GMT. German PMI (57.1 expected) is then out at 8:55GMT, directly followed by Eurozone PMI (54.1 expected) at 9:00GMT. A batch of UK data is then out at 9:30GMT including; mortgage approvals (50.0k expected), consumer credit (-0.1B expected), net lending (0.9B expected), PMI (56.5 expected), and M4 money supply. Data in European trade is then capped off with the Eurozone unemployment rate (10.1% expected) at 10:00GMT. With the exception of some marginal gains in Aussie and Kiwi, all major currencies track lower against the buck on the day. US equity futures and commodities are however bid, which makes the direction of the markets on Monday that much more difficult to predict.
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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