Euro Awaits News on Greece Deal Progress as EU Leaders Meet

2015-06-26 04:20:00

Talking Points:

Aussie Dollar Drops, Yen Outperforms on Risk Aversion in Asian Trade
Kiwi Dollar Seesaws on RBNZ Rhetoric, Upbeat Trade Balance Report
Euro Waiting on Greece-Linked News-Flow from EU Leaders’ Summit

The sentiment-linked Australian Dollar traded lower while the safety-geared Japanese Yen outperformed as risk aversion swept markets in overnight trade. The MSCI Asia Pacific regional benchmark stock index fell 0.9 percent, following negative cues from Wall Street. Newswires attributed the dour mood to the absence of a funding deal between Greece and its creditors at an emergency meeting of Eurozone finance ministers.

The New Zealand Dollar saw sharp see-saw volatility. The currency fell after the RBNZ reiterated that the exchange rate remains unjustifiably high in its Statement of Intent. This seemed to fuel fears that policymakers may intervene to beat down the Kiwi once again. The bank also pledged to explore “macro-prudential policy options” for reigning in the real estate market, hinting house price inflation won’t hold back on-coming interest rate cuts. An upbeat set of Trade Balance figures served to trim losses however.

Another quiet day on the European data front is likely to keep Greece-related news-flow in the spotlight. Leaders of EU member states are set to continue a two-day summit in Brussels and traders will keenly monitor rhetoric coming out of the event for signs of a breakthrough or a final collapse of negotiations without further room to maneuver.

Markets fear that failure to overcome the impasse may lead to a Greek default and push the country out of the Eurozone, triggering as-yet unknown consequences for the currency bloc and the world economy at large. Hopes were running high early in the week after Athens submitted an updated set of proposed reforms meant to unlock a tranche of bailout funding. Traction has failed to materialize thus far however.

Signs of progressahead of another emergency Eurogroup meeting over the weekend may lift the Euro amid ebbing uncertainty risk. Sentiment may likewise firm, boosting higher-yielding currencies (notably in the commodity FX complex) while weighing on the Yen. Follow-though might be limited however considering the markets’ priced-in outlook seems to favor an eventual agreement. Continued deadlock may not fuel volatility however, with investors unlikely to give up hope until June’s €1.6 billion IMF repayment comes due and the bailout program expires at month-end.

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Asia Session

GMT	CCY	EVENT	ACT	EXP	PREV
22:45	NZD	Trade Balance (NZ$) (MAY)	350M	-100M	183M
22:45	NZD	Exports (NZ$) (MAY)	4.36B	4.30B	4.13B
22:45	NZD	Imports (NZ$) (MAY)	4.01B	4.30B	3.95B
22:45	NZD	Trade Balance YTD (NZ$) (MAY)	-2570M	-2835M	-2656M
23:30	JPY	Jobless Rate (MAY)	3.3%	3.3%	3.3%
23:30	JPY	Job-To-Applicant Ratio (MAY)	1.19	1.17	1.17
23:30	JPY	Overall Household Spending (YoY) (MAY)	4.8%	3.6%	-1.3%
23:30	JPY	Natl CPI (YoY) (MAY)	0.5%	0.4%	0.6%
23:30	JPY	Natl CPI Ex Fresh Food (YoY) (MAY)	0.1%	0.0%	0.3%
23:30	JPY	Natl CPI Ex Food, Energy (YoY) (MAY)	0.4%	0.4%	0.4%
23:30	JPY	Tokyo CPI (YoY) (JUN)	0.3%	0.5%	0.5%
23:30	JPY	Tokyo CPI Ex Fresh Food (YoY) (MAY)	0.1%	0.1%	0.2%
23:30	JPY	Tokyo CPI Ex Food, Energy (YoY) (MAY)	0.2%	0.1%	0.1%

European Session

GMT	CCY	EVENT	EXP	PREV	IMPACT
06:00	EUR	German Import Price Index (MoM) (MAY)	0.2%	0.6%	Low
06:00	EUR	German Import Price Index (YoY) (MAY)	-0.4%	-0.6%	Low
08:00	EUR	Eurozone M3 Money Supply (YoY) (MAY)	5.4%	5.3%	Low
08:00	EUR	Eurozone M3 Money Supply 3M Avg (MAY)	5.1%	4.7%	Low