Markets Nervously Await Greek Vote

Ahead of the Greek vote, most currency pairs are only marginally changed compared to yesterday’s NY close. The exceptions are commodity dollars that rallied strongly against the USD. Euro zone economic sentiments falls and Canadian consumer inflation surges higher.

Economic data did not have any impact today as market participants wait for Greek vote. UK Mortgage Approvals for May came in line with expectations at 46K, up slightly from previous 45K. The Euro Zone Economic Sentiment falls to 105.1 in June from 105.5 in May and Swiss KOF Economic Barometer printed 2.23 down from previous 2.3.

Canadian CPI for May came out much higher at 0.7% from previous 0.3%. Core inflation increased from 0.2% to 0.5% also significantly higher then expected 0.2%. On year over year basis prices increased 3.7%. The surge in inflation should underpin the CAD in near term as rate increases start to be expected.

Greek austerity measures have been broadly expected to pass. Equities, commodities and risk currencies benefited from this sentiment. However, situation continues to be difficult and tense. How will the austerity measures be actually implemented in light of such a strong opposition? What will happen when the results of the second round of bank stress tests are published on July 13th? Reports suggest that as many as 15 European banks may fail these tests.

New York session has only one significant data release. US Pending Home Sales for May are due at 10:00 am ET and are expected to improve significantly to 1.3% from previous drop to -11.6%. Later at 10:30 am ET Crude Oil Inventories could have an impact on oil price and consequently on the Canadian dollar.

Patrik Urban