After Greece finally presented the EU with reform proposals on Monday, the optimism grew for a deal to be struck imminently. However, the Euro continued to fluctuate throughout the day as speculation continued. After five months, Athens constituted some progress as stated from German chancellor Angela Merkel, but still more work is needed and time is short.
A divide in Greece is unfolding with people protesting against austerity, the elected Syriza party who were elected back in January on their anti-austerity pledges, could face a backlash within Greece with their new reform proposals to its creditors. Although the deal is believed not to include any further reductions in its pensions (but phasing out early retirement is included) or public sector wages, the reforms include new taxes on businesses and the wealthy, plus further increases on selective VAT. An accord is deemed to be getting closer as the 30th June deadline is only a few days away, if agreed the next question for Greece will be how will the people react? It looks as though clear political power will save Greece from default and prevent the dreaded Euro exit. If this week concludes with agreement between Greece and its creditors, there is still no doubt that the Grexit story will rear its ugly head once again.
Purchases of new homes in the US rose in May to the highest level in seven years, signalling the industry is gaining momentum heading toward the second half of the year. New home sales were up 2.2%, exceeding expectations and posting a figure of 546k. The healthy labour market and income prospects are bolstering the industry. The pickup in demand points to gains in construction of residential real estate that will contribute to GDP for the rest of the year. The Greenback strengthened after this release.
German IFO takes centre stage today as the survey based on manufacturers, builders, wholesalers, and retailers view of the economy is released. It will be important to see if the Greek debt situation is affecting consumer sentiment.