Euro still weighed down by Greece

US Dollar:
A second flash crash in commodities saw a very positive day for the dollar yesterday. The currency was very well bid once the American markets came in to play and we saw big gains against the euro and it finished the days session with a swing of about 200 points ( 1.4400 to 1.4200 ). The continuing problems in Greece ( pro¬testers rioting in the streets of Athens ) and the ending of quantitative easing has certainly helped the green¬back .
Market attention today for the dollar today focuses on Retail sales and the market is expecting to see a rise to continue the upward trend we saw last month.

DATA : 13.30 Core Retail sales expected 0.7% and PPI

Pound:
To use a well known song title used by the Labour party during their 1997 election campaign “Things can only get better” and after yesterdays Bank of England inflation report that is how a lot of us feel this morning. Mervyn painted a rather gloomy picture for the coming months and indeed years. The outlook for growth had deterio¬rated over the last 3 months and they see inflation “ markedly higher “ in the near term. They believe that infla¬tion could go as high as 5% later this year and not reach their target rate of 2% till 2013. Previously they hoped to reach their target at some stage during 2012 but alas it looks like we will have to wait a little longer. To further compound the misery it looks like interest rates are on the way North-a rate hike of 0.25% is now fully expected and the markets believe we could see this as early as December with a continuation during 2012. On the back of this news however we saw nice Sterling gains as the markets like the prospect of higher interest rates. We saw a very quick 100 point move against the Euro and the Dollar-while sterling has held these gains against the Euro it has gone the other way against the Dollar and now sits about 60 pips lower at 1.6320.
Data: 9.30 Manufacturing Production

Euro:

A poor day yet again for the Euro. The concern in the markets is that Greece may be forced to restructure its debt as many European leaders seem to be against granting additional aid . The euro has dropped 2.5% in a measure of 10 developed –nation currencies since May4th. The Greek situation coupled with problems for Portugal and Ireland and the lessening chances of a rate hike( for June at least) has certainly not helped and we could see a rocky ride for the Euro in the short term. We start this morning with GbpEur at around 1.1480 ( from 1.1380 yesterday ) and EurUsd at 1.4200 ( a drop of around 200 pips from yesterday )
DATA : No major data to be released today.

General:
The Australian Dollar had a poor day yesterday as a sharp fall in commodities and poor unemployment figures weighed on the currency, The employment figures were the worst seen since 2009

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