Euro Consolidates Gains; Market turns to US Durable Goods
USD is mixed since London open. It is unchanged against EUR, up against CAD and weaker against the rest of the majors. German data improves slightly. Focus turns to US May Durable Goods Orders and final release of Q1 GDP.
EUR is consolidating gains from yesterdays New York rally after the news that Greek austerity package has been agreed upon. While the agreement is an important first step, keep in mind that this agreement has to be ratified by the parliament next week. By coincidence, the ratification process should take place during the fourth national strike this year which will last for two full days. The opposition to the austerity measures is significant so the possibility of political disruptions exists and should something unexpected occur, the common currency would likely drop.
German data came out positive this morning when German Ifo Business Climate in June rose to 114.5 from previous 114.3 and Current Assessment rose to 123.3 from 121.5.
BOE Governor King focused in his speech on Greece and needed Bank Capital reforms. The governor said that UK exposure to Greece is remarkably small and that the aim should be to make the financial system more resilient by imposing new Capital rules as it is impossible to prevent financial crises. As Mr. King did not speak directly about the UK economy, the GBP selling that often occurs during his speeches did not materialize.
Todays New York session has only one significant data release. US Durable Goods Orders for May are due at 8:30 am ET and are expected to improve significantly to 1% from previous drop to -3.6%. Core orders are expected to improve to 1% from previous -1.6%. Final release of Q1 GDP is expected at 1.9% but unless we see a major revision, reaction is likely to be muted as traders will find new information on goods orders more important.
Here's Ashraf's CNBC APPEARANCE regarding the SPR release http://video.cnbc.com/gallery/?video=3000029548
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