- Euro weakened across the board after Greece/European creditors reached to an agreement.
- EUR/USD down to 1.1054 from 1.1197 highs. EUR/GBP tests 0.7108 from 0.7201.
- EUR/JPY fell to test 136.42 from 137.80.
- EU Tusk- Euro zone leaders reach unanimous Greece deal.
- Austrian Fayman- Tsipras relented and accepted IMF involvement in new bailout.
- Fayman- It will be very difficult to implement agreement.
- EU Juncker- There will be so Grexit, satisfied with the result.
- FR Hollande- Greek debt reprofiling to be achieved through extension of loan maturities.
- Merkel- Greece parliament must approve all conditions before German parliament meets to approve.
- Suga- Greece deal will be positive for Japanese economy.
- BOE survey shows sharp rise in demand for mortgages in Q2.
- BOE- UK lenders expect mortgage demand to remain solid after Q2 surge.
- (1400 ET/1800 GMT) Treasury budget (Jun) (consensus +$51.0 bn, previous +$70.5 bn).
Key Events Ahead
- (1145 ET/1545 GMT) Fed Trade operation 15-year Fannie Mae / Freddie Mac (max $475 mn).
- (1430 ET/1830 GMT) Fed Trade operation 30-year Ginnie Mae (max $925 mn).
FX Recap
The US dollar strengthened after euro zone leaders inked a deal with Greece in an all-night summit, prompting investors shift their focus away from Europe and towards the prospect of higher U.S. interest rates, the euro reversed its gains to trade down 0.9 percent on the day at $1.1060. The dollar gained broadly, hitting an 11-day high against the yen at 123.44 yen.
EUR/USD is supported below 1.1100 levels and currently trading at 1.1081 levels. It has made intraday high at 1.1195 and low at 1.1053 levels. After two days and two nights of non-stop negotiations, Greek Prime Minister Alexis Tsipras and his 18 euro zone peers have finally agreed on a plan for radical economic reforms and measures in exchange for financial aid for almost bankrupt Greece. The euro hit fresh daily lows as the Greek-agreement boost fizzled out. It is now on the Greek parliament to pass the harsh reforms to be able to get the third bailout package. The Greek government has now to imply a number of key reform measures by Wednesday. After these reforms are passed, the procedures of the third bailout program might start towards the end of the week. Initial support is seen around at 1.0914 and resistance at 1.1243 levels. Option expiries are at 1.1060 (412M), 1.1100 (337M), 1.1125 (677M), 1.1200 (567M).
USD/JPY is supported above 123.00 levels and posted a high of 123.48 levels. It has made intraday low at 122.15 and currently trading at 123.30 levels. The greenback was bid on Monday as the latest Greek deal raised too many questions about the future economic health in the country. Today Japan released revised industrial production data with flat numbers at -2.1%. Market focus will now shift to US data this week, with retail sales on Tuesday, Fed Chair Yellen's testimony along with the Fed's Beige Book on Wednesday, followed by CPI and housing data on Friday. Near term resistance is seen at 124.57 and support is seen at 120.63 levels. Option expiries are at 122.45 (600M), 123.00 (990M), 123.50-55 (700M).
GBP/USD is supported above $1.5500 levels. It made an intraday high at 1.5587 and low at 1.5490 levels. Pair is currently trading at 1.5574 levels. Pair jumped to a fresh session high on the back of a rally in the risk assets and the sell-off in the EUR/GBP pair. The strength in the GBP also represents a narrowed UK trade deficit released on Friday. With no major data due today, the attention now shifts to the UK CPI data due for release tomorrow. Initial support is seen at 1.5256 and resistance is seen around 1.5603 levels. Option expiry is at 1.5400 (432M).
USDCHF is supported above 0.9400 levels and trading at 0.9470 levels and made intraday low at 0.9366 and high at 0.9493 levels. Volatility was higher on Monday as traders were digesting the latest outcome of an eventual Greek deal reached on Monday. The EUR/USD pair dropped on this news and since EUR/USD and USD/CHF are inversely correlated to each other, the euro decline pushed the USD/CHF pair higher. Near term support is seen at 0.9341 levels and resistance is seen at 0.9500 levels.
AUD/USD is supported below 0.7500 levels and trading at 0.7428 levels. It has made intraday high at 0.7467 levels and low at 0.7407 levels. The Australian dollar broke out of the bearish gap and climbed higher in the Asian session, now pushing AUD/USD towards flat notes, as traders continue to digest the latest Greek talks while ignoring mixed Chinese trade data. China's trade surplus shrank to $46.6 billion in June from $59.49 billion, coming in weaker than the forecast $57 billion surplus. Initial support is seen at 0.7360 and resistance at 0.7647 levels. Option expiries are at 0.7450 (420M), 0.7500 (1.2BLN), 0.7550-60 (331M).
