Risk Improves Ahead Of Greek Vote Optimism

Market Brief

Currency action today has been positive on expectations of positive developments from the Greek austerity package voting which is expected to pass and give a lifeline to Greece to avoid any default. EURUSD erased earlier losses on speculation the Greek crisis won’t prevent the ECB from raising rates next week to cool inflation. EURUSD traded at highs of 1.4400 after moving down to lows of 1.4338 amid protests in Greece against the package cut. USDJPY moved up to highs of 81.14 after Treasury yields moved up yesterday, increasing appeal of US assets, GBPUSD recovered from lows of 1.5913 as traders pared bets on higher interest rates after BOE policy makers signaled they are concerned about growth outlook, the currency traded at highs of 1.6014 on Greek optimism, AUDUSD strengthened to highs of 1.0596, NZDUSD moved up to 0.8159, Gold recovered to traded at highs of 08, Silver moved up to .35 and Oil recovered from its losses to trade at .46 highs.

Losses in the euro were limited after ECB President Trichet said yesterday that policy makers are in “strong vigilance mode,” supporting expectations for an interest-rate increase at the ECB’s meeting on July 7. The dollar strengthened against most of its 16 major counterparts on prospects rising returns on U.S. assets will attract global investors as treasury 10-year yields touched 3.05% yesterday, the highest since June 15. Japan’s industrial production rose at the fastest pace by 5.7% in more than 50 years, led by carmakers as they restored operations at plants after a record earthquake and tsunami on March 11.

In other news, French finance minister Lagarde was officially appointed as IMF chief, US consumer confidence was weaker than expected at 58.5 while risk sentiment was slightly weaker yesterday on talks of Chinese tightening but later recovered on Greek optimism on today’s vote, Fed’s Fisher said that the current monetary policy is just right but some monetary policies would need to be removed once the economy picks up. We have US pending home sales, Canadian inflation report, UK mortgage approvals, ECB’s Draghi to speak along with the most important news of Greek parliamentary voting on the austerity package.