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European Session – Euro rises on hopes of Greek deal, EU leaders meet for talks at emergency summit

The market focus was clearly on Greece today, with some nervousness being evident among investors, which led to some see-sawing in the single currency.

The euro rose early in the European session to test the key 1.1400 level against the dollar, lifted by optimism for a deal between Greece and its creditors today after news that late on Sunday the Greek government handed in some new proposals to its creditors for reforms. These proposals included changes to the retirement age as well as income tax changes. After hitting a high of 1.1402, the euro dipped to 1.1310 before bouncing back up to 1.1391.

Helping keep the euro steady was an announcement that the ECB raised the ELA (emergency liquidity assistance) for Greece for a third time in a week today. Meanwhile, a post-Eurogroup meeting press conference indicated that Eurozone finance ministers were optimistic that a deal was possible soon and this meeting was not as acrimonious as recent Eurogroup meetings. Later today, there will be talks at the highest political level, as EU leaders will hold a summit meeting to discuss the latest developments on the Greek situation.

In other news, away from Greece, there were data releases on Eurozone consumer confidence and US existing home sales.

Sentiment in the Eurozone was more stable in June, after the flash estimate came in at minus 5.6 points versus minus 5.8 points that was forecast.

Meanwhile, the dollar rose after sales of previously owned homes in the US jumped to a 5 ½ year high. The May figure increased 5.1% to an annual rate of 5.35 million units. The dollar bounced to 123.28 after the data to move off a day’s low of 123.00 but was still off the day’s high of 123.35. The key risk events for the dollar this week will be PMI data on Tuesday, final first quarter GDP on Wednesday and finally PCE inflation data on Thursday.

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