FUNDAMENTAL OUTLOOK at 0800 GMT (EDT +0400)
Greek Prime Minister Papandreou’s government has survived the confidence vote in the Greek parliament. The euro jumped 35 pips higher on the news, but settled back down again a few moments later. Risk appetite had already improved substantially ahead of the vote as investors correctly anticipated the outcome. EURUSD traded at 1.4346-1.4434, and USDJPY at 80.20-80.33.
Equity markets across Europe and the US rallied strongly. Although short term risk has cleared, Greece still needs to pass austerity measures next week and there is a still event risk out there. Existing US home sales came in slightly stronger than expected in May, albeit still weaker than the April print. US Treasury secretary Geithner repeated the US’ strong dollar policy noting that a “strong dollar will always be” in the interests of the US. Our analysts team expects the Fed to confirm at Wednesday’s FOMC meeting that QE2 will finish on schedule at the end of June. Norges Bank will hold its policy decision today, while The Bank of England Minutes are also out and investors may need to brace for a dovish turn.
SCHEDULE
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