Market Drivers June 25, 2015

EUR slips lower as no progress made on Greek talks
SNB Jordan – Swiss franc still overvalued
Nikkei -0.46% Europe 0.02%
Oil $60/bbl
Gold $113/oz.

Europe and Asia:
EUR GFK Consumer Climate 10.1 vs. 10.1

North America:
USD Weekly jobless 8:30

USD PI/PS 8:30

The euro drifted lower in morning European trade today as prospects for a greek deal remained elusive and time was starting to run short ahead what everyone believes will be a hard deadline of June 30.

The EUR/USD fell towards the 1.1150 level after reports suggested that Prime Minister Tsipras made no progress in late night talks yesterday and that creditors we on the verge of issuing a “take it or leave it” proposal to the Eurogroup by 1100 GMT. The later report was denied but the fact both sides appear to be hardening their positions has unnerved the currency markets a bit as prospect of a deal remains uncertain.

The Greeks refuse to make any compromises on cutting pension benefits to lower income recipients or increasing the retirement age which remains one the lowest in Europe. Pensions are clearly the key sticking point in the negotiations and may well derail any possibility of a deal as the Tsipras government is adamant in protecting the benefits of its citizens.

Despite the ominous newsflow, the currency markets remained relatively calm as selling appeared orderly for the time being. The market however is clearly starting to show some strain with USD/JPY now drifting lower on risk aversion flows as well. The pair fell more than 70 points off its highs and remained below the 123.50 mark as risk sentiment clearly waned.

Although the primary focus in the Greek drama remains on EUR/USD, any failure to reach a deal and send Greece into default could impact USD/JPY as well. The pair is increasingly sensitive to risk sentiment flows again and could react negatively if a failure to resolve the Greek crisis causes tumult in capital markets.

On the economic front the calendar in Europe was barren and is very spare in North America as well with only the weekly jobless claims and Personal Income/Spending on the docket. Consensus view looks for healthy jump in spending to 0.7% from 0.0% and if the data proves on target it could help provide some support for USD/JPY in early North American trade, but until the Greek negotiations come to some sort of resolution traders will keep a wary eye on the other side of the Atlantic.

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