The euro started the day lower in Asian trading as failure on Sunday for Greece to reach an agreement with its creditors dragged down the single currency. There were reports that the talks lasted less than an hour with EU officials laying the blame on the Greek side for not bringing anything new to the negotiating table and making incomplete proposals, while Athens insisted that it would not give in to demands for more concessions on wages, pensions and VAT.
The Greek finance minister Yanis Varoufakis ruled out a “Grexit” in a German newspaper interview and suggested that a debt restructuring would be the only way forward. The focus will now shift to the June 18 Eurogroup meeting of Eurozone finance ministers in Luxembourg. Many see this as the final deadline where Greece can realistically negotiate the release of the last tranche of the remaining bailout fund of 7.2 billion euros, which expires at the end of the month.
Asian shares slid on the lack of a breakthrough with Greece, with China being the hardest hit as the country’s securities regulator announced new rules for limiting the size of the country’s margin trading and short selling.
The dollar moved broadly higher as it was supported by Friday’s stronger-than-expected University of Michigan Confidence data. The euro briefly fell below 1.12 against the greenback in Asian session trading before bouncing back up to 1.1228. It also recovered to 0.7230 against the pound, having dropped as low as 0.7202. Sterling was slightly weaker against the dollar at 1.5537 and against the yen, the dollar also edged slightly higher at 123.38.
The day ahead is not expected to be too busy as the main focus will be Wednesday’s Fed meeting and key economic data coming out over the course of the week starting with the UK’s inflation figureson Tuesday. Today’s attention will likely centre on US industrial production data but speeches by RBA Assistant Governor Kent and the ECB President could also be ones to watch for market reaction.
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