Forex Market Overview

US stocksand the dollar rose on Wednesday on positive economic reports. S&P 500 closed up 0.7%, with financialsleading the gains and only energy stocks falling following a sharp drop in oilprices. ADP report showed private-sector hiring in June created 237 thousandnew jobs and hit the fastest pace in half a year, beating expectations by about20 thousand. This sets the stage for positive expectations for official jobsreport today. Federal Reserve policy makers had indicated the decision ontiming of interest rate hike will be data dependent, and improving labor marketdata indicates the economy is on strong recovery track, increasing thelikelihood of a September rate hike. The ISM manufacturing index also beatexpectations. The dollar strengthened after the reports, the US Dollar Index, ameasure of the dollar’s strength against a basket of six currencies, ended up0.8%. Today at 13:30 CET June change in nonfarm payrolls, unemployment rate,initial jobless claims and continuing claims will be released in US. Thetentative outlook is positive. At 15:00 CET May factory orders will be released.The tentative outlook is negative.

Europeanstocks advanced on Wednesday as market sentiment was buoyed by reports Greeceoffered to resume talks with creditors and Greek Prime Minister Alexis Tsipraswas ready to accept nearly all of the conditions of the bailout deal. The StoxxEurope 600 rose 1.5%, Germany’s DAX 30 advanced 2.2% and France’s CAC 40climbed 1.9%. Euro fell against the dollar. The stock market and banks inGreece are closed for the week, and ATM withdrawals by locals are limited to 60euros a day. On Tuesday the euro-zone creditors refused to extend Greece’sbailout program which expired at midnight as Greece missed the payment toInternational Monetary Fund. Negotiations failed to make any progress onWednesday and Eurogroup chairman Jeroen Dijsellbloem said there were no groundsfor further talks with Greece until the Sunday referendum as Tsipras called onGreeks to reject austerity measures by voting ‘no’ to creditor proposals.European Central Bank’s Governing Council decided to leave the amount ofEmergency Liquidity Assistance for Greek banks frozen at around 89 billioneuros. In economic reports manufacturing sectors in euro-zone countries exceptfor Greece expanded in June with final euro-zone manufacturing PMI meeting expectationsat 52.5. Today at 10:00 CET May producer price index will be published ineuro-zone. The tentative outlook is positive.

Japan's Nikkei rose 1% today supported by a weakeryen and stronger auto exporters which reported higher June sales in US.Tomorrow at 2:35 CET June Services and Composite PMIs will be released inJapan. The tentative outlook is positive.

Chineseshares slumped today and Shanghai Composite fell 3.4% even as China relaxedrules on margin trading before market open. On Wednesday stocks tumbled about5%, recording more than 20% losses since mid-June. Even with recent declinesChina’s main stock market has almost doubled in value over the past year.

Oil prices are edging higher today after falling onWednesday as US weekly oil inventories rose unexpectedly by 2.4 million barrelsand reports indicate that the Organization of the Petroleum Exporting Countrieshave increased output in June.

Goldprices arefalling today after closing at lowest level in a month as stronger dollar andrising equities lowered metal’s safe haven appeal. It appears that investorsare discounting the negative impact of possible Greek exit from euro-zone.