Euro drops on Monday as Greek stocks tumble on its reopening: Aug 4, 2015

Market Review - 03/08/2015 22:43GMT 
 
Euro drops on Monday as Greek stocks tumble on its reopening

Although euro has staged a brief bounce from last Friday's New York support at 1.0965 to 1.0996 in European morning on Monday, the single currency ratcheted lower as the Greek stock market plunged on its reopening following a five-week shutdown during which the country risked being pushed out of the euro zone. Euro later fell to 1.0941 in New York morning before trading sideways later in the day.

S&P said European Union supranational outlook revised to negative; 'AA+/A-1+' ratings affirmed; the long-term rating on the EU partly relies on the capacity and willingness of its 28 members to support it; the institutional arrangements backing the EU underpin our rating on the supranational organization; the negative outlook reflects that there is a greater than one-in-three likelihood of a rating change on the EU during the next two years; the negative outlook reflects expectation that the EU will provide first-loss guarantee support for financing connected to the Juncker plan; the outlook revision reflects further downward pressure on the average weighted rating on net budgetary contributors to the EU; the negative outlook also reflects EU's lack of any paid-in capital, a key difference compared with other multilateral institutions; view the EU as the most prominent of the European supranationals.

Despite last Friday's volatile movements, the greenback ratcheted higher on Monday. The pair rose to 124.27 in New York morning, however, risk aversion due to the selloff in US equities knocked price lower to an intra-day low of 123.86.

On the data front, U.S. ISM Manufacturing PMI came in weaker-than-expected at 52.7 versus economists' forecast of 53.5. U.S. core PCE rose 0.1% versus economists' forecast of 0.2%. U.S. personal income rose 0.4% whilst consumption rose by 0.2%.

Although cable retreated after a brief rise to 1.5645 in European morning and then fell marginally below Asian low at 1.5616 to 1.5614 just ahead of the release of U.K. Markit/CIPS manufacturing PMI, price staged a bounce after data showed that manufacturing activity in the U.K. expanded at a faster rate than expected in Jul (but still remained near the previous month's 2-year low at 51.4) but only to fall to 1.5567 in New York morning. The British pound later bounced briefly to 1.5624 before trading sideways later in the day.

Market research group Markit said that its U.K. manufacturing PMI inched up to a seasonally adjusted 51.9 last month from a reading of 51.4 in June. Market had expected the index to rise to 51.6 in July.

Tuesday will see the release of Australia's retail sales, trade balance, RBA rate decision and policy statement, U.K. Markit construction PMI, eurozone producer prices, U.S. Redbook, Canada's RBC manufacturnig PMI, U.S. ISM, durable goods and factory orders.