Euro – The single currency advanced as did discussions between the government of Greece and members of the IMF and EU, whose officials are scouring documents to examine the progress of its austerity measured and its plans to sell off state assets. The sticking point remains the role of those investors holding Greek bonds, but sentiment in the market believes that conditions are favorable for a rollover either voluntarily or involuntarily as debt matures in coming years. The single currency earlier breached $1.4500 as investors reveled in a strengthening in service activity across the Eurozone during May. PMI services data unexpectedly showed higher levels of expansion than was predicted boosted by a strong rise in German data.
British pound – The pound weakened in response to a weakening in service sector activity. The May series dipped to 53.8 from 54.3 and fell faster than was expected. The pound is set to close the week lower by 2.3% versus the euro and 1.3% against the Japanese unit. Against the dollar the pound fell to its weakest in a week touching $1.6278 after the release of the data.
Aussie dollar – Ahead of the U.S. numbers on Friday the Aussie is struggling to make much headway. It fared poorly overnight despite an earlier surge to $1.0716 as regional stocks remained stuck in the mud and following a report showing its service sector finally turned to contraction last month. The AiG performance of services index crossed down through the 50-line to indicate service businesses contracted last month. The Aussie slipped in New York to buy $1.0646 U.S. cents.
Canadian dollar – Investors must wait a further week for the release of Canadian labor statistics. Typically the report foreshadows its U.S. equivalent, but owing to the short work week, we’ll just have to wait. Fears for the health of the U.S. labor market are today at the forefront, at least ahead of the data with the Canadian dollar easing to $1.0208 U.S. cents. The report is equally important for monetary policy considerations domestically given the strong reliance on exports to the U.S. with Bank officials recognizing earlier in the week that household balance sheets are likely to remain burdened for a considerable time to come.
Andrew Wilkinson is a Senior Market Analyst at Interactive Brokers LLC
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