Greek crises comes to a head

Last week saw the Greeks continue to headline as discussions were seen to break down repeatedly, stoking further tensions between Eurozone member officials to the point at which the Greek PM was referring to offers but the Eurozone as “blackmail”. The end result was the decision over the weekend to close Greek banks until 7 July, limiting the amount the Greeks can withdraw to €60, while the Greek stock exchange will remain closed today. The end result has been what Greece’s PM has referred to as a “humiliating” potential acceptance of the proposed austerity package, about which the Greeks have until 5 July to respond to via a public referendum. With the euro opening up 1% down this morning, the Greeks appear in the imminent position whereby a banking collapse is almost inevitable along with their Eurozone exit. Creditors are livid that the Tsipras has called for the public vote to stay or leave the commonality, whilst Eurozone ministers have withdrawn plans to lend a further €15Bn to the Greeks. It is extremely unlikely that they will come up with the required €1.6Bn IMF loan repayment by tomorrow’s deadline and are thus likely to default.

In the UK, GBP was rather muted last week with Europe hogging the limelight - events on the mainland have even pushed the UK’s talk of exiting the Eurozone to one side. In terms of data this week, we’ll see the current account balance tomorrow which gives an idea of imported/exported goods which directly related to GBP demand/value. For the rest of the week we’ll see construction, manufacturing and services PMI data towards the end of the week which are all expected to show an improvement.

In the States, strong residential building sales (the best performance month-on-month since Aug’13) showed things are looking good for the yanks. Unemployment was also seen to stabilise at 271K. Out this week we’ll see more employment data and non-farm payroll data on Wednesday. We will also probably see some positivity for the dollar as investors avoid the issues in Europe at the moment, provided no agreement comes into play to strengthen EUR.