Greece continues to be in the headlines after defaulting on the €1.6bn repayment to the IMF late yesterday evening. Stories continue to circulate, with Greek Prime Minister Alexis Tsipras sending a letter to creditors early yesterday which boosted hopes of a deal on reforms. The Greek leader was said to offer some concessions on reform plans, but stood firm maintaining a 30% discount on VAT on Greek islands which lenders want abolished. However, this hope seemed short lived as the EU will not enter into further talks with Athens until the referendum, due to happen on the 5th of July is complete. Therefore, talk of reforms are not realistic when the referendum is only days away.
Away from Greece defaulting, yesterday had a host of manufacturing PMI figures released from the UK, US and the Eurozone. The figures released from the single currency zone were all roughly in line with expectations, with Germany’s remaining constant at 51.9, as the main Euro figure stayed sticky at 52.5. With the US manufacturing ticking slightly higher, the disappointing posting came from the UK as growth slowed to its weakest rate in more than two years. Growth in the UK remained lackluster as subdued demand from Europe on exports continues to dent growth.
Today’s focus switches from Greece to US labour data as we have the release of the all-important non-farm payrolls along with the unemployment rate. Yesterday’s ADP reading exceeded expectations and saw the private sector employment increase up to 237,000. Markets focus heavily on the ADP number as it can give insight into the actual employment jobs created due out later today. If the correlation between the two is accurate, a reading above the forecasted 231k looks likely. The second piece of high tier data set to be released is the US unemployment figure which is forecast to drop to 5.4% from 5.5%. The labour market is one of the Feds main gauges that could possibly trigger an earlier than expected rate hike, therefore if this figure exceeds expectations like yesterday’s ADP, Dollar strength will no doubt occur this afternoon.