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Talking Points

  • US Dollar to Fall Further as Greece Passes Austerity Measures
  • Pound to Look Past Mortgage Approvals, Focus on Risk Appetite
  • Swiss Franc, Yen Outperform in Asia as Markets Brace Volatility

Needless to say, the outcome of the Greek parliament vote on a new austerity package – a scheme including tax increases, spending cuts and government asset sales – is in focus today. As we discussed in detail earlier in the week, last week’s successful confidence vote that allowed Prime Minister George Papandreou and his cabinet to remain in power make today’s proceedings largely ceremonial. Still, market confidence is likely to get a boost from the outcome as a degree of uncertainty about the current environment is removed, weighing on the safe-haven US Dollar while boosting the Euro as well as the spectrum sentiment-sensitive currencies.

On the economic data front, UK Mortgage Approvals headline the docket, with expectations calling for a modest increase to 46.3k in May. While the result would amount to the largest increase in four months, it will do nothing to call into question the overall down trend in place since December 2009. As such, the figures are unlikely to materially impact established dovish expectations about Bank of England policy, passing with little fanfare as the British Pound falls in with risk appetite dynamics driven by events in Athens.

Major currencies were little changed in the overnight session as traders dug in their heels for the upcoming event risk. The Swiss Franc narrowly outperformed, rising as much as 0.3 percent against its leading counterparts. Understandably, the largest increase was scored against the common currency, with the Swiss unit finding demand as a European regional safe-haven away from the obviously Euro-centric nature of upcoming volatility. The Japanese Yen was also well-supported as traders trimmed exposure to risky assets including carry trades funded cheaply in the perennially low-yielding currency ahead of the Greek vote.

Related: Japanese Industrial Production Beats Estimates

Asia Session: What Happened

GMT

CCY

EVENT

ACT

EXP

PREV

23:50

JPY

Industrial Production (MoM) (MAY P)

5.7%

5.5%

1.6%

23:50

JPY

Industrial Production (YoY) (MAY P)

-5.9%

-6.3%

-13.6%

1:00

AUD

DEWR Skilled Vacancies (MoM) (JUN)

-2.0%

-

-1.9% (R-)

Euro Session: What to Expect

GMT

CCY

EVENT

EXP

PREV

IMPACT

5:30

EUR

French Gross Domestic Product (QoQ) (1Q F)

1.0%

1.0%

Low

5:30

EUR

French Gross Domestic Product (YoY) (1Q F)

2.2%

2.2%

Low

8:30

GBP

Mortgage Approvals (MAY)

46.3K

45.2K

Medium

8:30

GBP

Index of Services (3Mo3M) (APR)

1.3%

0.9%

Low

8:30

GBP

Index of Services (MoM) (APR)

-

0.6%

Low

8:30

GBP

M4 Ex OFCs 3M Annualised (MAY)

-

-2.0%

Low

8:30

GBP

M4 Money Supply (MoM) (MAY)

-

0.1%

Low

8:30

GBP

M4 Money Supply (YoY) (MAY)

-

-0.9%

Low

8:30

GBP

Net Lending Sec. on Dwellings (MAY)

0.7B

0.7B

Medium

8:30

GBP

Net Consumer Credit (MAY)

0.4B

0.5B

Medium

9:00

EUR

Euro-Zone Business Climate Indicator (JUN)

0.9

0.99

Medium

9:00

EUR

Euro-Zone Consumer Confidence (JUN F)

-10

-10

Medium

9:00

EUR

Euro-Zone Economic Confidence (JUN)

105

105.5

Low

9:00

EUR

Euro-Zone Industrial Confidence (JUN)

3.5

3.9

Low

9:00

EUR

Euro-Zone Services Confidence (JUN)

9

9.2

Low

9:30

CHF

KOF Swiss Leading Indicator (JUN)

2.23

2.30

Medium

11:00

EUR

Greek Parliament Votes on Austerity Plan

-

-

High

Critical Levels

CCY

SUPPORT

RESISTANCE

EURUSD

1.4273

1.4464

GBPUSD

1.5926

1.6120

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