The week gets off to a very slow start with minimal economic data and many markets across Europe closed for public holiday. Currency markets are likely to remain trapped in tight ranges as a result, but activity will heat up with the release of US growth and inflation figures expected to confirm that the country has hit a “soft patch” of economic growth. In the eurozone, there are no significant figures due out this week, but all eyes will be on negotiations over the Greek bailout, which appear to have reached an impasse. The deadline for an agreement is nearing and the closer markets get to that deadline without an agreement, the more the euro could be sold. Focus this week will turn to the UK where CPI and claimant count figures will be released.

Sterling

Sterling should gear up for an exciting week of data. Inflation figures are due out and will be followed by claimant count figures later in the week. The headline rate of inflation is expected to remain stable at 4.5 per cent, while the claimant count is seen up by 8,000. With wage pressures subdued there continues to be little need for higher interest rates in the UK according to the governor of the central bank, who is expecting inflation figures to rise to five per cent this summer as higher energy prices feed through to real economic data.

US Dollar

The US dollar made a technical recovery on waning risk appetite at the end of last week. Weak economic data due out this week in the US could potentially trip up the dollar’s recovery.

Euro

The rift between the European Central Bank and Germany on how to settle the Greek debt crisis continues. Comments made from Germany’s Merkel over the weekend suggest that the impasse continues. The June 20 FinMin meeting is the deadline for coming up with a solution to the crisis.

Japanese Yen

The Japanese yen weakened slightly on the back of soft economic data for April. Machinery orders fell unexpectedly in April. The drop suggests that a recovery will be “bumpy”.

Travelex Global Business Payments Malta, freephone: 800 733 22, www.travelex.com/mt/

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