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US dollar, global markets rise on imminent Greek deal hope

US stocks edged higher as hopes that Greece will come to agreement with creditors bolstered investor confidence. The S&P 500 and Dow Jones Industrial Average added 0.1%. The dollar strengthened as Federal Reserve Board Governor Jerome Powell said US economy is expected to strengthen in the second half of the year and could be ready for a September rate hike and a second increase in December. The ICE US Dollar rose 1.1% to 95.3670. The comment boosted the dollar and led investors to discount disappointing durable goods report which showed US durable goods orders fell more than expected, recording a seasonally adjusted 1.8 % fall in May due to big drop in aircraft orders. The Housing Price Index for April recorded a 0.3% increase, rising at the same pace as in the previous month. Expansion in the manufacturing sector slowed as preliminary Manufacturing PMI in June fell to 53.4 from 54.0 in the previous month. New single family home sales increased 2.2% in May, hitting the highest level since February 2008. Today at 12:00 CET Mortgage Applications will be released by the Mortgage Bankers’ Associations in US. At 13:30 CET the third estimate of first quarter GDP will be released.

European stocks closed higher on Tuesday as Greece’s creditors were optimistic an agreement to unlock the bailout funds in return for reforms can be reached this week. The Stoxx Europe 600 rose 1.2 %, Germany’s DAX 30 and France’s CAC 40 gained 0.7% and 1.2% respectively on upbeat manufacturing reports. Euro recorded the largest one-day loss against the dollar in a month as the market’s focus shifted to prospects for higher US interest rates. Greek economy minister George Stathakis said two or three items remained to settle with international creditors on a package of proposals put forward by Athens, including long term debt relief and value added tax (VAT) exemptions in the Greek islands. The creditors insist on imposing a 23% VAT across the board, with the exception of food, medicine and hotels, which would be taxed at an 11% rate. But the Greek government wants to keep VAT on certain basic goods and services at a lower rate. The Eurogroup of euro-zone finance ministers will be meeting today in the evening, ahead of a European Union summit on Thursday. Today at 9:00 CET June Ifo Business Climate Index, Current Assessment and Expectations Indexes will be released in Germany. The tentative outlook is positive.

Nikkei rose 0.3% today to the highest level in 18 years as yen weakened against the dollar and market sentiment was buoyed by hopes that Greece will manage to get the bailout funds necessary to make the June 30 payment to International Monetary Fund and avert a default.

Oil prices are rising today after closing higher on Tuesday as investors awaited the US official data on oil inventory and reacted to apparent rise in US-Russia tensions as it was reported that the US will provide weapons, aircraft and forces to help Europe defend against security threats including Russia. Today at 15:30 CET US Crude Oil Inventories will be released by the EIA, a fall in crude supplies is expected.

Gold prices settled on Tuesday at lowest level in two weeks as expectations of imminent deal in Greek bailout negotiations lowered demand for the safe haven metal.



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