As anticipated, the whole of Eurozone was talking up support of the system in general and Greece in particular. Rumours of an agreement between the German Ministry of Finance, the ECB and the IMF over funding going forward helped the Euro establish a base. However, the reprieve was short lived and negative sentiment returned. News that the Bundestags want to delay its decision on further Greek financial aid until September was viewed with dismay, with the Eurogroup’s Chairman Juncker expressing the general concern that this was “not a good idea and risked accentuating the current problems”. This morning, the Greek PM has re-shuffled his cabinet, installing a new Finance Minister, ahead of the vote of confidence motion scheduled for Parliament early next week. This will be a vital period for the country as approval for the Greek government to push through the enhanced austerity measures are a pre-requisite for the IMF to release the July tranche of the bail-out package. Despite comments from European officials to the contrary, the payment is not a done deal, and should next week’s vote in Athens not go according to plan, there could be some difficult conversations taking place. The agenda looks more and more to be moving towards ways to contain the contagion from a Greece default rather than strive to try and prevent, what looks like, the inevitable. Expect more positive Eurozone / Euro comment from parties with a vested interest today.

Yesterday’s UK retail sales numbers were weaker than the market had been expecting, though the fault appears mainly to do with market expectations, since there was always bound to be a big reversal after the holiday influenced rise in April’s figure. Sterling suffered a knee-jerk reaction, falling against the Euro. Pre-weekend nerves seem likely to keep a strong downside pressure on the Euro and it seems likely that we see a small recovery in Sterling’s strength ahead of the weekend.

Today’s data calendar is light on substance with nothing scheduled from the UK or the Eurozone and only the leading indicator release and a Michigan University consumer survey from the US late this afternoon. Risk is currently low with equity markets down, but with little reaction so far in the Forex markets.

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