Daily Report: Euro Maintains Gain On Greece Optimism

Euro rebounded strongly yesterday and stayed firm in Asian session. News regarding Greece was seen as the main driver in the rebound. It's reported that Greece's international creditors are giving the country a final take-it-or-leave-it offer aiming at breaking the neverending stalemate in the negotiations. Greece is expected to accept it with at most minor changes. European commission president Jean-Claude Juncker is set to meet with Greek prime minister Alexis Tsipras today in Brussel. The outcome of the meeting will be closely watched. Also, it's reported the ECB raised the level of emergency cash available to Greek banks by EUR 500m. Technically, EUR/USD strong rebound suggests that the corrective pattern from 1.0461 is still in progress and is possibly in another rising leg for 1.1466 and above. Picture in EUR/GBP is similar is rebound from 0.7054 is seen as the third leg of the consolidation pattern from 0.7013 and could head to 0.7482 resistance now. EUR/JPY also resumed recent rise from 126.09.

ECB rate decision and press conference will be another main focus today. The central bank is expected to keep key interest rate at record low of 0.05%. Also ECB would accelerate the EUR 60b per month asset purchase program ahead of the anticipated drop-off in liquidity during the summer. Inflation data released yesterday suggested deflation risks could be behind now for Eurozone. And markets focus would be on any upgrade, even if it's a slightly one, in ECB's view on inflation outlook. Meanwhile, ECB president Mario Draghi would likely acknowledge that recent data point to improved growth outlook in the region. Also to be released in European session are Eurozone unemployment, retail sales and services PMI final. UK will also release services PMI.

The US calendar is rather busy today. ADP employment is expected to show 190k growth in May. Trade balance, ISM services will also be featured while Fed will release Beige Book economic report. Fed governor Lael Brainard delivered rather dovish message overnight. She noted that "consumer spending so far this year has been undeniably weak." And, the possibility of a weaker than expected underlying economy "argues for giving the data some more time". And, to her, "if continued labor market strengthening is confirmed and inflation readings continue to improve, liftoff could come before the end of the year." That is later than market expectation of a September hike.

Released from Australia, Q1 GDP grew 0.9% qoq, up from 0.5% in Q4 and beat expectation of 0.5% qoq. Over the year, growth was up 2.3%, lower than Q4's 2.4%. Looking at the details, mining increased 4.2% and contributed 0.3% to growth over the quarter. Housing investment was another contribution of growth. But outside of that, the non-mining sectors were still struggling. And recent weak capex data argued that the outlook is not improving ahead. Overall, markets are expecting RBA to keep as easing bias in the coming months while the chance of another cut would depend on inflation and job data.