Crunch time nearing for EURO; more anticipated slumps

Key events today lined up for data releases:

Employment level (GMT 07:15) with consensus numbers at 4.21 millions of employed workers. Previously the same was seen at 4.23 millions as recorded by Swiss statistics.

CBI Realized Sales (GMT 10:00): forecast is at 18 while previously printed at 12.

Business Confidence in Netherlands: forecast is at 3.1 while it was increased to 3.30 in April of 2015 from 1.40 in March of 2015.

Key issues that may have an adversely impact on Euro:

The focal point on Greece should turn into more sensitive this week since we are moving towards crunch time for a resolution ahead of the next major debt payment to the IMF due on 5^th June.

This week will be Euro area money supply data (3M Money supply) for April on Friday where our European strategists look for signs of any more cheerful borrowing environment to materialize.

A wide range of probable results, but we outline three current scenarios (a deal by early June, an interim deal/summer recess, a Cyprus-style ultimatum and referendum).

Since direct foreign exposure to Greece is low, even an IMF default and/or capital controls would be likely to cause limited contagion if the country's EUR membership is assured.

Infectivity boils down to three questions: (1) Does a Greek exit really matter? (2) If it does, is it going to be further drama or it materializes? (3) If it continues, when will that be apparent?

We think an exit would have a meaningful negative impact, but we still think Greece will stay in the Euro area.

EUR's upside is likely to be limited in the event of a deal, but we would expect downside in the event of a referendum. We like low-delta EUR/GBP put options as a hedge for that risk.