Euro May Rise Absent Greece Surprise, Expanded ECB Guidance

DailyFX

The Euro may have scope to correct higher unless Greece fails to secure its latest funding tranche or ECB President Draghi expands on last week’s “forward guidance”.

Talking Points

  • Latest Greek Funding Tranche in Focus as Eurozone FinMins Meet in Brussels
  • Euro Unlikely to Find New Downside Catalysts in IMF Report, Draghi Comments

All eyes turn to Brussels to start the trading week as Eurozone Finance Ministers convene to approve the next tranche of funding for Greece after an investigative visit from “troika” (EU/ECB/IMF) inspectors over the weekend. Some reports suggest observers were unsatisfied by progress made on reform efforts but Greek Finance Ministers Yannis Stournaras said a deal to unlock the next installment of the €240 billion in loans pledged to Athens will probably be struck before the sit-down begins. Investors are well aware of the gap between facts and officials’ rhetoric however and will be watching closely as results from the summit emerge.

Other topics of discussion may include the recent surge in Portugal’s borrowing costs – where the benchmark 10-year bond yield soared above the closely-watched 7 percent level last week – as well as Cyprus aid efforts. Separately, the IMF is due to release its annual “Article IV” report on the state of the Eurozone economy while ECB President Mario Draghi will sit for his quarterly testimony to the Committee on Economic and Monetary Affairs of the European Parliament.

Given the progress on containing the debt crisis achieved since last year’s report, the IMF is likely to stress lingering recession in the common currency area. The international lender called on the ECB to cut interest rates and deploy unconventional easing measures in 2012; it seems likely do so again, but the sting of such comments may be neutralized after the central bank’s dovish outing last week. The same may be true of Mr Draghi’s testimony, where further details on the ECB’s new “forward guidance” are likely to be vague at best. On balance, this seems to hint that the Euro has scope to correct higher absent an unexpected snafu in Brussels.

Capitalize on Shifts in Market Mood with the DailyFX Speculative Sentiment Index

Asia Session:

GMT

CCY

EVENT

ACT

EXP

PREV

23:50

JPY

Bank Lending Banks ex-Trust (JUN)

2.2%

2.3%

2.1%

23:50

JPY

Bank Lending incl Trusts (YoY) (JUN)

1.9%

1.9%

1.8%

23:50

JPY

Adjusted Current Account Total (¥) (MAY)

623.3B

600.0B

852.7B

23:50

JPY

Trade Balance - BOP Basis (¥) (MAY)

-906.7B

-902.1B

-818.8B

23:50

JPY

Current Account Balance (YoY) (MAY)

58.1%

91.6%

100.8%

23:50

JPY

Current Account Total (¥) (MAY)

540.7B

600.0B

750.0B

1:30

AUD

ANZ Job Advertisements (MoM) (JUN)

-1.8%

-

-2.5%

2:35

NZD

REINZ Housing Price Index (JUN)

3685.8

-

3686.9

2:35

NZD

REINZ Housing Price Index (MoM) (JUN)

0.0%

-

0.7%

2:35

NZD

REINZ House Sales (YoY) (JUN)

0.0%

-

7.5%

4:30

JPY

Bankruptcies (YoY) (JUN)

-8.0%

-

-9.0%

5:00

JPY

Eco Watchers Survey: Current (JUN)

53.0

55.5

55.7

5:00

JPY

Eco Watchers Survey: Outlook (JUN)

53.6

55.7

56.2

Euro Session:

GMT

CCY

EVENT

EXP/ACT

PREV

IMPACT

5:45

CHF

Unemployment Rate (JUN)

2.9% (A)

3.0%

Medium

5:45

CHF

Unemployment Rate s.a. (JUN)

3.2% (A)

3.2%

Medium

6:00

EUR

German Trade Balance (€) (JUN)

13.1B (A)

18.0B

Medium

6:00

EUR

German Current Account (€) (JUN)

11.2B (A)

16.7B

Medium

6:00

EUR

German Imports s.a. (MoM) (JUN)

1.7% (A)

1.2%

Low

6:00

EUR

German Exports s.a. (MoM) (JUN)

-2.4% (A)

1.4%

Low

7:15

CHF

Industrial Production (YoY) (1Q)

3.0% (A)

1.7%

Low

8:30

EUR

Euro-Zone Sentix Investor Confidence (JUL)

-11.4

-11.6

Low

10:00

EUR

German Industrial Production (YoY) (MAY)

-0.5%

1.0%

Medium

10:00

EUR

German Industrial Production (MoM) MAY)

-0.5%

1.8%

Medium

13:00

EUR

Eurozone Finance Ministers Meet in Brussels

-

-

High

13:00

EUR

ECB’s Draghi Speaks at European Parliament

-

-

Medium

13:00

EUR

IMF Releases Eurozone Article IV Statement

-

-

Medium

Critical Levels:

CCY

SUPPORT

RESISTANCE

EURUSD

1.2784

1.2895

GBPUSD

1.4805

1.5027

--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com

To contact Ilya, e-mail ispivak@dailyfx.com. Follow Ilya on Twitter at @IlyaSpivak

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