Daily currency report

Optimism has grown over Greece with markets not only expecting parliament to pass the government’s austerity plan, but it was also revealed that encouraging discussions are being held in France over maturing Greek debt. German banks are expected to hold negotiations over a similar plan. Economic data released showed a rise in consumer sentiment in Germany, which has also provided a short-term boost for the euro. In the UK, the Treasury Select Committee will hear testimony over the Bank of England’s inflation report. Dovish tones coming from the testimony could weigh further on sterling. In the US, consumer confidence is seen rising after a steep fall in the prior month, while house price data is forecast to continue declining.

Sterling

Thousands of workers are expected to strike as planned as public-sector workers are seen protesting against pension reforms and the government’s plan to increase the retirement age. The announcement that the planned strike will proceed comes in front of the testimony. Bank of England MPC members are scheduled to speak to the UK Treasury Select Committee on the central bank’s Inflation Report and give evidence of accountability. In addition to testimony, markets will be on guard for revisions to Q1 GDP.

US dollar

As investors sit and wait for the Greek Parliament vote on austerity measures, US economic data entertained investors. Personal income was released slightly below forecast and spending figures were flat at 0.1 per cent. The Fed’s favoured gauge for inflation rose unexpectedly, but had little lasting impact on the dollar.

Euro

Governments in France and Germany are in heavy negotiations with banks and insurers over rolling over some €30 billion in Greek debt for the next 30 years. Insurers and banks in France appear receptive to the deal and more is expected to be learned from German banks. French banks look ready to rollover maturing Greek debt for 30-year paper, buying the government much needed time. The European Central Bank has also given the idea a thumbs up.

Japanese yen

Japanese retail sales were released at -1.3 per cent year on year verses an expected -2.6 per cent. The monthly figures showed a second consecutive month of gains, suggesting that the economy continues to make advances in the wake of March’s disaster. Equity markets in Asia are trading higher which typically weighs on the yen, but this is having the opposite impact as a move out of the currency left speculators short.

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