Forex News – Greece's Vote Still Felt in the Markets

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By ForexMansion.com

 

Optimism continues to dominate markets since the Greek parliament passed the austerity plan that will help the country avoid a default, yet gains were limited after the disappointing PMI data from China, which signaled that manufacturing activities eased in June in the second largest economy in the world.

Investors are still encouraged to target higher yielding assets today before going into the weekend, yet traders should note that this coming Monday the US will enjoy the Independence Day holiday, thereby volume will be thin and markets may witness sudden and volatile movements.

The euro continues to rise against the U.S. dollar on optimism Greece will avoid a default. Greece is set to receive a second bailout from EU and the IMF, however the country must work hard to implement the austerity measures correctly since most certainly they wont be able to obtain a third bailout.

The single currency is finding more support by the hawkish comments from ECB members, where it seems that the ECB might announce a rate hike next week by 0.25%, after the CPI flash estimate rose by 2.7% in June, well above the ECB target for inflation at 2%.

Over the coming period the EUR/USD may extend its gains mainly if confidence levels will remain elevated. A possible rate hike next week will continue to provide the Euro with momentum against the dollar, especially if the US economic data will suggests further weakness.

The US released a worst than expected weekly jobless claims report yesterday. But today markets await the release of the consumers confidence from the University of Michigan and the important ISM manufacturing report that will be a good barometer of what is to come for the U.S. economy.

The euro is consolidating today around the 1.4500 level despite the lackluster manufacturing report from Germany, yet the pound fell to the lowest of 1.5994 after the economy reported a very disappointing PMI manufacturing report for the month of June which fell to 51.3 from the expected 52.3.

The yen weakened today trading as of this writing around the 80.80 level, as the Japanese economic data continue to show that Japan faces a tough road ahead. The Australian dollar fell today to the lowest of 1.0671 as gold is loosing momentum. The dollar index is trading around the 74.45 level.

The commodities continue to see pressures from growing concerns among the markets participants that the global economy is slowing. Gold slipped below the $1500.00 level as demand on safe heaven eased, touching the lowest of $1487.45 an ounce as of this writing. While oil is trading below the $95.00 level.

Originally posted here

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