Euro rebounds briefly on hopes of a new bailout deal for Greece before falling sharply to 1.1043: Jul 2, 2015

Market Review - 01/07/2015 20:46GMT 
 
Euro rebounds briefly on hopes of a new bailout deal for Greece before falling sharply to 1.1043

Despite staging a brief bounce from 1.1095 to 1.1171 in European morning on Wednesday on hopes of a new bailout programme for Greece, the single currency ratcheted lower n tumbled to as low as 1.1043 near New York close due to the release of upbeat US ADP employment data.

Eurozone official said 'new bailout programme for Greece theoretically doable before Jul 20 payment deadline to ECB.' Reuters later reported a new bailout deal for Greece could be agreed in time for the country to meet a July 20 deadline for the repayment of 3.5 billion euros of bonds to the ECB, a euro zone official said on Wednesday.

Greek Finmin Varoufakis said will have understood the message of the Greek people on coming Monday after referendum creditors ; upcoming referendum has triggered a debate in Europe about the need for a sustainable solution; Greek government's objective is to have a deal with creditors on Monday; government is willing to accept strict measures, if debt is sustainable; Greek bank situation will return to normal soon after deal is reached; once Greece has a deal, ECB will raise ELA again and liquidity will be restored.

Eurogroup's Dijsselbloem said no further talks with Greece until after referendum. Dijsselbloem wrote to Tsipras saying will only look at request for new loan on basis of referendum result. EU's Tusk said Europe cannot help Greeks against their will, "let's wait for referendum result".

Despite Tuesday's selloff to a 1-month low of 121.94, the greenback ratcheted on Wednesdasy and penetrated Tuesday's 122.61 res to 122.78 in European morning and later 123.24 in New York morning. The pair later retreated briefly to 122.89 befoer rising again due to the rebound in U.S. stock markets.

Atlanta Federal Reserve's GDPNow forecast model showed on Wednesday that the U.S. economy is on track to expand 2.2 percent in the second quarter as construction spending rose 0.8 percent to just over a 6-1/2 year high in May.

The British pound tracked euro's movements closely on Wednesday. Despite staging a brief rebound from Asian low at 1.5675 to 1.5739 due to aforementioned euro-positive news, cable tumbled after the release of downbeat UK manufacturing PMI and the pair later weakened to as low as 1.5589.

Thursday will see the release of U.K. BRC shop price index, Australia's trade balance, U.K. Nationwide house price and Markit construction PMI, eurozone producer prices, ECB monetary policy meeting, non-farm payrolls, unemployment rate, initial jobless claims, ISM, factory orders and durable goods.