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European Session – Euro see-saws as Eurogroup schedules teleconference on Greece

The euro remained off Monday’s lows and retested the 1.12 level on hopes for a potential deal between Greece and its creditors.

There have been a lot of rumours swirling throughout the day but the latest news is that Eurozone sources said that the Eurogroup will hold a teleconference on Greece today at 17:00 BST. Greece’s 1.6 billion euro payment to the IMF is due today and Greek Finance Minister Yannis Varoufakis said that it will not be made, and so it is hoped that some kind of last minute deal will be reached today. Meanwhile, there were reports that the Greek government asked for a new bailout from the Eurozone’s ESM rescue fund as the current one expires today.

Investors are waiting for more developments and this has been keeping the euro more or less steady against the dollar throughout the European session, consolidating between 1.1133 and 1.1243.

Meanwhile German Finance Minister Wolfgang Schaeuble said that he sees Greece staying in the euro even if the result of the referendum is no on Sunday. Over the weekend, Greek Prime Minister Alexis Tsipras called for a referendum to be held on July 5th on the creditors’ bailout terms. Today is the second day that capital controls have been in place following the Greek government’s request to close the banks after the ECB capped the ELA assistance to Greek banks.

In terms of data today, Eurozone CPI came in line with expectations at 0.2% y/y in June, down from 0.3% y/y in May.

In other news today, the UK released final first quarter GDP data which was revised up to 2.9% y/y from a prior 2.4% estimate. The pound did not react to the data but later in the session it rose to a high of 1.5774 against the dollar.

The dollar fell after reaching a high of 122.60 against the yen following the release of a batch of mixed US data. US house prices saw weaker increases in April than in March. According to the Case- Shiller 20-city report, prices in April were up 4.9% from a year earlier, slightly slower than annual growth of 5% seen in March. Other data showed the Chicago PMI rose in June to 49.4 but this was below the 50 level indicating a slight contraction in conditions. More upbeat data showed US consumer confidence rose in June to 101.4 versus a 97.4 estimate. Focus now turns to Wednesday’s release of the national Institute for Supply Management survey.

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