Daily Economic Outlook: 1st July, 2015

Markets will continue to digest ramifications today of developments in Greece. Although, the risk of the ECB withdrawing emergency liquidity support to the country's banks remains, it is more likely for now to continue to work with the Greek central bank to maintain financial stability, says Lloyds Bank.
Aside from Greece, the focus will fall on the UK manufacturing PMI and US ADP employment reports, as well as the final estimate of the eurozone manufacturing PMI. 

"Evidence of a stronger tone of manufacturing activity in the eurozone in June and a stronger output expectations component in the CBI industrial trends survey lend support to our expectation of a further recovery in UK manufacturing PMI to around 52.4 from 52.0 in May", adds Lloyds Bank.

The US ADP employment report for June will serve as a guide to official nonfarm payrolls (NFP), released tomorrow because of the Independence Day holiday on Friday. That said, surprises in the ADP number have not correlated particularly closely with surprises in NFP. A rise of 215k for ADP private payrolls and a 235k rise in official NFP, notes Lloyds Bank.

A tightening labour market, as well as the possibility of a strong rebound in Q2 GDP growth, would provide the motive for the Fed to start raising interest rates as soon as September. The US manufacturing ISM today is also expected to have stabilised, after falling in the first part of the year.