Greece has managed to avoid defaulting on its civil service wage bill but is drawing back funds from embassies and outlying offices to shore up its funds just in case the next salary run in a fortnight makes the government purse a little light. And we know the end-game is in sight for Greek negotiators because the Prime Minister has now become involved in negotiations with creditors. That is clearly crucial if they are only 2 weeks away from domestic default. The highlights for the euro this week will be business and consumer sentiment indices. The forecasts are not good, so unless Greece can sort out its situation with the EU, EC and IMF, (Germany mainly) we will almost certainly see weakness in the Euro later in the week.
Friday's Canadian data was mixed. Manufacturing sales at nearly three times expectations would normally be enough to boost the Canadian Dollar but existing home sales growth was slower in April than in March. The markets decided to sell the Canadian Dollar against a strengthening Pound and we sit towards the top end of the GBPCAD range this morning. This week's inflation data from the UK and Canada should favour the UK, so perhaps we will see further gains in this pair this week.
The Pound has a few hurdles to overcome this week. It starts on Tuesday with UK inflation data which may show a glimmer of expansion after a 0.0% figure last month. We will also get the minutes from the last BOE meeting and public sector borrowing data plus what looks like it might be a very upbeat retail sales report this week. Looked at relative to other economies, the UK still looks like a success story but we are also in a period when new policies from the newly elected majority government could derail the Pound's strength and, if they are hoping to boost exports, it may suit the government to do just that. So beware.
This week's US data diary is pretty bloated. Inflation data is likely to remain in negative territory but the minutes from the last Federal Reserve meeting will be worth a read and the housing market and business sentiment indices are also closely followed. These are just the highlights so it may well be a bumpy ride for the USD over the next 5 days.
Elsewhere, the Reserve Bank of Australia will publish its board meeting minutes and we'll get consumer confidence data from Australia as well. The Aussie Dollar is doing slightly better than its NZ counterparty.
Speaking of which, the Reserve Bank of New Zealand will issue its 2 year inflation forecasts this week. We will also get consumer confidence and credit card spending figures and producer price data. All of which could be overshadowed by any further news of Chinese stimulus measures. So stand by for action.
And you have to feel sorry for the soldier who thought he was getting the Hebrew word for 'strength' tattood on his arm in 2" high letters. The ink was noticed by a chap who could read Hebrew when the soldier was out shopping. When the chap asked him whether he knew what it meant, the soldier proudly said, "Yes it means Strength". "No it doesn't", said the other guy, "it says matzoh". That's a biscuit usually eaten by Jewish people to celebrate Passover. Fancy walking around with the equivalent of 'minced pie' on your arm in massive letters!