EURUSD – a debate overshadowed by strikes

The Greek parliament started a debate over the austerity program – the one that needs to be accepted if Greece is about to receive another tranche of aid and avoid defaulting. The votes might begin late on Tuesday but some will be delayed until Wednesday and Thursday (there will be numerous votes on specific proposals to implement the program). In theory, after securing a confidence vote, the Greek government should be comfortable enjoying a majority of 155 out 300 deputies. However, there is an uncertainty. Politicians are under pressure from the public with strikes held by workers in electricity, public transport and other public services. The Greek press speculated that as many as four deputies from the ruling party may vote against the program and if that’s the case, the market me become nervous again even if the votes are eventually won (since reduced majority could herald problems in the future).

The market is clearly awaiting the signal from Greece with EURUSD defending the support yesterday (1,4073 remains the key support) but still remaining in a short-term consolidation engulfed by the weekly candle from two weeks ago.

DAX30 – German bulls protect their territory

German equity market remains relatively strong despite all the uncertainty and the bulls confirmed their willingness to defend their territory yesterday. The key decisions were taken in mid-June when the DAX30 futures were able to defend the key 7000 pts level which led to a rise above the upper limit of a downward channel. This limit now serves as a support and the bulls seem to be determined to protect it. Obviously, the German market is not resistant to the global sentiment with fresh macroeconomic data and the news from Greece having potentially the strongest impact. However, should the global environment become more favorable, bulls are set to make a move on the DAX30.

Events to watch – US data and the debate

Investors are well focused on Greece yet the US macro should attract some attention as well. The key figure for today and the second most important this week is the Conference Board sentiment index (10.00 ET, 16.00 CET, consensus 60,5 pts.) which, somewhat optimistically, is expected to be nearly flat from May. There will be also releases on the US residential prices (9.00 ET, 15.00 CET, consensus -4% y/y), UK current account (4.30 ET, 10.30 CET, consensus -5,2 bln GBP) and UK final Q1 GDP (4.30 ET, 10.30 CET, consensus +0,5% q/q).      

Przemysław Kwiecień PhD, Chief Economist

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