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Greece Could Declare a Technical Default Tomorrow

On Monday the theme of the day throughout the market is still Greece. The last round of negotiations on Saturday finished in collapse. The Greek prime minister, Alexis Tsipras, cut short all discussion and declared that there will be a referendum on 5th July. The referendum will pose the question of whether the Greeks will continue to cooperate with their European creditors and in doing so will accept further financial aid in return for reform. During this time bank holidays have been declared and a capital controls have been put in place. On 30th June, Athens, more likely than not, will not be able to meet its debt repayment of 1.5 billion euros on schedule to the IMF. In failing to do so, the further 7.2 billion euro aid package will not be freed up for the Greeks. If this happens and the Greeks don’t pay up, a technical default will be on the cards tomorrow.

All the same, the Grexit is still pretty unlikely. The sides are probably going to continue their negotiations and come to some sort of an agreement to avoid chaos throughout the financial market. The euro/dollar fell to 1.09 on the back of this news and this morning it won back a large part of the movement.

According to data that has been published, the amount of retail sales in Japan throughout May, in comparison with that of April, rose by 1.7% and by 3% YOY, thereby exceeding expectations. The preliminary numbers for May industrial production are down by 2.2% MOM and by 4% YOY; less than expected. The diverse data coming out of Japan led to a rise in the yen against the dollar, which it then weakened against, and then strengthened once more.

Today the Japanese finance minister, Taro Aso, declared that he is neither expecting a far reaching nor a sharp growth of the yen due to the Greek debt crisis. At the same time, he made note of the fact that the country has fallen into an unpredictable situation.

According to today’s data, mortgages in the UK in May increased by 2.1 billion pounds, thus being the most significant monthly rise since November last year. The number of mortgage approvals in May fell to 64,434 against April’s 67,580. However, it’s worth mentioning that the indicator is often reassessed.

On the whole, the multiple indicators which have come out in recent times are showing that housing market activity in the UK is due a rise.

Today it’s worth having a look at the preliminary CPI in Germany. There’s expectation of absence of change. Tomorrow some inflation data for the Eurozone will be published and that is sure to catch market attention.



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