The Greek government has done its part after voting to implement austerity measures passed earlier in the week. Now EU Finance Ministers will gather to work out a second bailout for Greece, while the fifth tranche of last year’s bailout is paid out. The money will provide Greece with the financing it needs to meet its obligations this month, pushing the prospects for a default further down the road. As a result, sentiment in the broader term is positive, which is supporting so-called commodity currencies and the euro. Safe havens, such as the Swiss franc, have given up recent gains.

Sterling

Sterling dropped to 15-month lows against the euro. In the past few months, sterling has performed particularly poorly in the week before a Bank of England MPC meeting. The central bank’s meeting coincides with the European Central Bank MPC meeting and the outlook for interest rates between the two banks is diverging in favour of the euro. As a result, sterling has slipped before the central bank meeting for the last couple of months.

US Dollar

With Greece avoiding default, investors in the US can go into the long holiday weekend feeling a bit better about being short on dollars. There are some other headlines out, which may negatively hit the dollar.

Euro

The Greek government has voted in favour of the austerity measures imposed on it by the IMF and EU. Attention will turn quietly to economic data, but investors will be mindful of the work that will be done by Financial Ministers in Brussels over the weekend.

Japanese Yen

The Japanese Yen has seen very little trading activity in the overnight session despite the variety of economic data released. The Q2 Tankan report of large manufacturers showed sentiment at -9 from +6 in the prior quarter. On the positive side, big capital expenditures rose to +4.2 in the Tankan report and core CPI nationwide remained at 0.6 per cent year-on-year in May.

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