Risk is off since London traders got to their desks. Euro has been steadily declining since Asian session as a reaction to EU leaders meeting. Market waits for Canadian data.
Euro has declined and trades in the lower end of the recent trading range just below 1.4100. Top European leaders meet in Brussels today to discuss details of Greek financial package and concerns that contagion could spread to Italy as Italian equities fell dramatically last week and German/Italian bond spread continues to widen.
German newspaper Handelsblatt reports that the ECB reached to five private financial institutions for advice on how to act in case of a sovereign default. As if this news was not bad enough for the Euro, the Financial Times printed an article that claims that EU leaders will now accept that Greece defaults at least on some of its debt. It will be interesting to watch how exactly will the French suggestion that banks roll Greek debt to longer maturities come into play considering the recent developments.
French Industrial Production and Manufacturing Production came out better than expected (2.0% from previous -0.5% and 1.5% from previous 0.1% respectively) but could not change the direction of the Euro as other news were more relevant.
Only two data releases will be published during the New York session today. At 8:15 am ET Canadian Housing Starts for June are due and are expected to reach 182K slightly lower compared to previous 184K. Later at 10:30 am ET Bank of Canada releases its quarterly Business Outlook Survey that could provide important insights regarding future changes in monetary policy. Bank of Canada will announce its next rate decision on July 19th.
Patrik Urban
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