Intraday Market Thoughts

FX Sidelined in Greek Deal, China Returns

by Adam Button
Jun 22, 2015 23:02

A Greek deal is all-but-finished as Juncker signalled a high level of confidence that an agreement is coming this week. Yet the euro was flat on the day while the yen lagged. The China manufacturing PMI from HSBC is next.  The Premium EURUSD long at 1.1110 on June 5 hit its final target of 1.1410 last week. EURAUD is in breakeven while the EURCAD and AUDNZD trades remain in progress and in the green. All trades are accompanied by technical charts and fundamental rationale.

Positive signs emerged from Greece throughout the day but the equity market responded much more strongly than the euro. Shares in Greece rose nearly 10% while the rest of the continent gained around 4%. The euro tested 1.14 twice but failed to sustain a break.

One factor that continues to weigh on the euro is the unwind of the bund trade. 10-year yields moved up 13 bps to 0.88%. The market may also be looking past Greece and focusing on the broader market.

Economic data was limited to US existing home sales, which hit 3.35m compared to 5.26m expected. That gave a slight lift to the US dollar but tomorrow's durable goods report will be a larger driver.

The immediate focus now shifts to China where markets reopen after a long weekend. Last week was the worst since Lehman as Shanghai shares dropped more than 13%. Hopes for PBOC action were dashed again but US-listed China ETFs were up more than 1% on Monday so sentiment has stabilized.

But Chinese sentiment can change in a flash. Specifically, the HSBC June flash manufacturing PMI which is expected at 49.4 from 49.2. Perversely, a slightly soft reading could boost stocks on speculation of rate cuts. It's due at 0145 GMT.

Act Exp Prev GMT
Markit Manufacturing PMI (JUN) [P]
54.2 54.0 Jun 23 13:45
49.4 49.2 Jun 23 1:45
Eurozone Markit PMI Composite (JUN) [P]
53.5 53.6 Jun 23 8:00
Eurozone Markit PMI Manufacturing (JUN) [P]
52.2 52.2 Jun 23 8:00
Eurozone Markit Services PMI (JUN) [P]
53.6 53.8 Jun 23 8:00
Existing Home Sales (MAY) (m/m)
5.1% 4.8% -3.3% Jun 22 14:00
Existing Home Sales (MAY)
5.35M 5.28M 5.09M Jun 22 14:00
New Home Sales (MAY) (m/m)
0.525M 0.517M Jun 23 14:00
New Home Sales Change (MAY) (m/m)
6.8% Jun 23 14:00
Durable Goods Orders (MAY)
-0.5% -1.0% Jun 23 12:30
Durable Goods Orders ex Transportation (MAY)
0.6% -0.2% Jun 23 12:30

Latest IMTs