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Dollar rises as world markets rally on Greek deal hopes

US stocks ended higher on Monday as investor confidence was bolstered by hopes that the new reform proposal by Athens will lead to an agreement between Greece and international creditors. The S&P 500 and Dow Jones Industrial Average gained 0.6%, with S&P 500 closing only several points below its all-time high reached last month. The dollar strengthened, with the ICE US Dollar Index closing higher 0.3% at 94.3880. Economic data also provided support for the bullish sentiment as Existing Home Sales increased 5.1% in May to a seasonally adjusted annual rate of 5.35 from 5.09 million in April. Today at 13:00 CET FOMC member Powell will speak on monetary policy in Washington, DC. At 13:30 CET May Durable Goods Orders will be released in US. The tentative outlook is positive for the dollar. At 14:00 CET April Housing Price Index will be published by the Federal Housing Finance Agency. The tentative outlook is positive. At 14:45 CET advance Manufacturing PMI for June will be released by Markit. The tentative outlook is positive. At 15:00 CET May New Home Sales will be released. At the same time Richmond Fed’s Manufacturing Index for June will come out. The tentative outlook is positive.

European stocks rallied on Monday as euro-zone leaders welcomed the reform proposal presented by Greek Prime Minister Alexis Tsipras on Monday. The Stoxx Europe 600 jumped 2.1% to 393.74, recording the biggest gain since May 8. Germany’s DAX 30 jumped 3.8% , the Athex Composite soared 9%. The euro weakened against the US dollar but advanced against the pound and the Japanese yen. The new Greek proposal includes concessions such as eliminating early retirement options starting from January 1, 2016, hiking the sales tax, increasing tax surcharges that middle- and high-income earners pay and introducing a levy on companies with annual net income of more than 500,000 euros ($568,000). The European Central Bank once again raised the amount of emergency lending assistance for Greek banks on Monday. Today advance June Manufacturing, Services and Composite PMIs for France, Germany and euro-zone will be released by Markit from 8:00 to 9:00 CET. The tentative outlook is positive for euro.

Nikkei gained 1.87% and hit a fresh 15-year high today on hopes that a deal on Greek bailout extension may soon be reached. Investor optimism was also buoyed by weaker yen and the budget outline to boost Japan's growth potential presented by government on Monday, while investors shrugged off unexpectedly weak preliminary manufacturing data showing the Manufacturing PMI fell from 50.9 in May to 49.9 in June, below the 50-level marking contraction. Tomorrow at 00:50 CET Bank of Japan May 21-22 meeting minutes and May Corporate Service Price will be released. At 06:00 CET June Small Business Confidence index will be published. The tentative outlook is positive.

Oil prices are falling today after closing higher on Monday. The near term outlook is bearish as investors are concerned about persistent oversupply in the world market. A Morgan Stanley report cited unsold oil cargoes of around 10 million barrels offshore West Africa and more than 3-month period it takes to find buyers for cargoes as a worrying sign for the market in the fall season.

Copper and metals are rising today as HSBC preliminary June Manufacturing PMI for China came in higher at 49.6 compared with May reading of 49.2.



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