Currency markets are steady after the Swiss National Bank announced no changes to its currency peg against the euro amid speculation policymakers would take additional steps to weaken the Swiss franc. Focus will now turn to an Italian debt auction with economists keen to see if Italy can continue to steer clear of the contagion that is currently eating into Spain’s finances; poor demand for Italian bonds could trigger a fresh wave of risk aversion.

The pound remains in negative territory so far and could fall further if the US dollar rebounds later following US weekly jobless claims data that is forecast to show an improvement. Through the middle of the entire global calendar, investors should also continue guesswork ahead of elections in Athens that could prove to be a decisive moment for the euro.

Sterling

Sterling fell sharply from near two-week peaks against the euro as some traders surprisingly took a more optimistic view ahead of Greek elections, reducing negative bets on the single currency on hope that a pro-bailout party will eventually prevail.

US dollar

The US dollar slipped following data showing a fall in retail spending in the US economy for the second month in a row. Sales fell by 0.2 per cent month-on-month in May while the prior month’s +0.1 per cent was disappointingly revised down to -0.2 per cent. Investors will look out for US weekly jobless claims for more clues but the unemployment measure could actually work in the dollar’s favour if claims fall by 2,000 as analysts have forecast.

Euro

The euro is at risk of another fall, but may just hold onto some gains that came about from investors reducing bearish bets on the shared currency and taking a chance on Greek elections producing a pro-euro result. The euro also benefitted from poor US retail sales data that put the US dollar back under quantitative easing-strain.

Japanese yen

The Japanese currency found assistance from the Reserve Bank of New Zealand’s decision to hold interest rates at 2.5 per cent and adopt a neutral bias. The RBNZ warned investors that global growth risks may force the central bank to keep borrowing rates at record lows for an extended period, damping the carry trade appeal of the so-called “Kiwi” which is often funded by selling the yen.

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