Euro is a bit firmer today as markets focus is on confidence vote in Greece. After a three day parliamentary debate, Greek Prime Minister George Papandreou faces a vote in confidence in his government today. In order to secure political support, Papandreou reshuffled his cabinet last week and replaced finance minister George Papaconstantinou with heavy weight Evangelos Venizelos, once a rival within the ruling party. It today’s vote is passed, the Greek parliament is expected to vote on the new austerity measures on June 28. And if everything’s smooth, Eurozone finance ministers will approve the next tranche of the bailout fund of EUR 12b on July 3 for Greece to satisfy rollover payments of maturing debts in mid July and ease the short term situation till September.

Meanwhile, the common currency gyrates inside tight range as news headlines flied around the markets. Eurogroup Chairman said regarding the Greece situation that a meeting will be held on July 3 which “pre-supposes” that the Greek authorities will have by then done everything possible to “allow us to take our decisions on a solid basis.” Fitch warned that it would regard both a Greek sovereign debt swap and a rollover of maturities, even a voluntary one, as a default. European Financial Stability Facility chief executive officer Klaus Regling said that the potential leading capacity of the EFSF will be raised by “raising the guarantee amount – the sum of all the guarantees from the euro area members states – from E440 billion today to E780 billion in the future”. The “over-guarantee” would be raised from the current level of 120% to 165% and that would “make the EFSF more efficient… eliminate the cap reserve and therefore also overborrowing, which was necessary as a credit enhancement to protect bondholders and to obtain triple-A ratings.” Technically, EUR/USD is staying around the middle of recent converging range between 1.4 and 1.5 levels. Similar picture is seen in EUR/GBP, which is now in the middle of the 0.86/0.9 converging range. EUR/JPY managed to hold above 113.41 support and recovered while EUR/CHF continues to consolidate above 1.2 psychological level. We’d anticipate more consolidations ahead in near term.

Aussie is a touch softer today as RBA minutes of its June 7 meeting suggested that the bank might keep rates on hold for longer than markets expected. The bank noted that higher rates were likely needed at some point, but “flow of data over the past month had not added any urgency to the need for an adjustment to policy”. It said it’s “prudent” to keep rates on hold at 4.75%.

Looking ahead,, German ZEW economic sentiments will be released today and is expected to turn negative to -3 in June. UK public sector net borrowing is expected to rise to GBP 16.5b in May while CBI trends total orders are expected to drop to -5 in June. Canadian leading indicators and retail sales would be released while US existing home sales will also be featured.

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