Dollar opened the week generally higher as supported by views that Fed will finally hike interest rate from near zero level within the coming months. The dollar index extends last week's rise and breaches 98 handle. Commodity currencies are generally lower as pressured by rate views as well as slump in commodity prices. In particular, gold tumbles to five year low and breached 1100 handle. European majors are also under some mild selling pressure against the greenback with Sterling paring last week's gains against Euro and Swissy.
In Eurozone, Greece will reopen banks today with capital controls somewhat "released". Greeks will be able to withdraw EUR 420 a week at once, instead of EUR 60 a day. Prime minister Alexis Tsipras is preparing for another parliamentary vote for securing the new three year bailout. The vote will be carried out on Wednesday for a second package of the reforms that are prerequisite for finalizing the bailout. German Chancellor Angel Merkel said in a TV interview that she's open to consider debt relief for Greece provided the reforms are worked out.
On the data front, UK Rightmove house price index rose 0.1% mom in July. The economic calendar is relatively light today. German PPI is expected to drop -0.1% mom, -1.4% yoy in June. Eurozone current account surplus is expected to widen to EUR 23.1b in May. Canada will release wholesale sales and is expected to be flat mom in May.
Looking ahead, the economic calendar is also light this week but there are a couple of important events. As Greece risk subsided, markets' focus turned back to monetary policy divergence. Sterling was the strongest currency last week as supported by hawkish comments from BoE governor Mark Carney. BoE minutes to be released will reveal other MPC members' thought regarding the timing of rate hike. Commodity currencies were under general pressure. In particular, the surprised rate cut by BoC triggered speculations that RBA and RBNZ will follow. RBNZ rate decision will be closely watched this week. Even if Kiwi could survive RBNZ, it will face another test from trade data. Australia will also release RBNA minutes as well as CPI. Here are some highlights for the week.
- Tuesday: RBA minutes; Swiss trade balance; UK public sector net borrowing
- Wednesday: Australia CPI; Japan all industry index; BoE minutes; US House price index, existing home sales
- Thursday: RBNZ rate decision; Japan trade balance; UK retail sales; Canada retail sales; US jobless claims
- Friday: New Zealand trade balance; China PMI manufacturing; Eurozone PMIs; US new home sales