Forex: Thursday's review
The euro pared its decline against the dollar after reaching a three-week low amid speculation an agreement between the European Union and the International Monetary Fund may allow Greece to avoid a debt default.
Europe’s shared currency erased most of its earlier declines after European Union Economic and Monetary Commissioner Olli Rehn said Greece will be able to get funding from the EU and International Monetary Fund in July as long as it enacts budget cuts. The IMF backed Rehn in a statement. The yen strengthened against the dollar after a report showed an unexpected slowdown in Philadelphia area manufacturing.
Greek Prime Minister George Papandreou will reshuffle his cabinet and seek to win a confidence vote today after attempts to garner opposition support for an austerity plan failed.
EU Commissioner Rehn said “close contact” with the IMF made him confident of an accord at a weekend crisis meeting to pay out 12 billion euros ($17 billion) in July as long as Greece enacts new budget cuts.
Greece’s immediate concern is to obtain 8.7 billion euros from Europe and 3.3 billion euros from the IMF in July, promised as part of last year’s precedent-setting aid package to stave off the euro area’s first default.
German Chancellor Angela Merkel and French President Nicolas Sarkozy will meet tomorrow in Berlin, with pressure increasing for the leaders to reach an accord on a rescue package for Greece. European Union finance ministers agreed on June 14 to convene again on June 19 after they failed to reconcile a German-led push for bondholders to shoulder part of the cost of a new plan for Greek aid.
EUR/USD: the pair shown low in $1.4070 area. Later the rate grown and finished session above $1.4200.
GBP/USD: the pair shown low in $1.6070 area, then grown in $1.6160 area.
USD/JPY: on results of yesterday's session the pair decreased in Y80.60 area. It is a quiet end to the week - in terms of the European data calendar at least. European data starts at 0600GMT with ACEA May new car registrations, although of more interest will be EMU trade data for April, which isreleased at 0900GMT at the same time as EMU construction output, also for April. At 1300GMT, the International Monetary Fund releases it's quarterly update of the World Economic Outlook.
US data starts at 1355GMT, when the Michigan Sentiment Index is expected to rise to a reading of 74.5 in early-June after rising sharply to 74.3 in May.