Euro stays firm as the strongest major currency this week. Traders seemed to be optimistic that Greece will finally strike a deal with international creditors. Greek prime minister Alexis Tsipras met with Eurozone Commission president Jean-Claude Juncker and head of Eurogroup finance ministers Jeroen Dijsselbloem yesterday. After the meeting, Dijsselbloem said the meeting was "good" and intense work would continue. Tspiras also mentioned that there was progress on on sticking point regarding the primary surplus and "there was a constructive will from the European Commission to reach a common understanding". According to some reports, the involved parties now target to wrap up the agreement by June 14.
Euro was also supported by ECB meeting yesterday. The June ECB meeting unveiled that the members revised higher the inflation forecast for 2015. HICP for 2015 is revised to 0.3% yoy from March 0%, as oil prices have strengthened during the past 3 months. Forecasts for 2016 and 2017 stayed unchanged at 1.5% and 1.8% respectively. The ECB staff left the GDP growth forecasts unchanged at 1.5% yoy for 2015 and 1.9% for 2016. Growth for 2017 was revised slightly lower to 2% from March's 2.1%. Released earlier this week, preliminary headline CPI gained 0.3% yoy in May, up from market expectations of 0.2%. Core CPI roses 0.9% yoy in May, up from 0.6% a month ago. Services sector CPI also accelerated to 1.3% yoy from 1%. Regarding the pickup in inflation, President Draghi noted that "inflation came out higher than market expectations but not higher than our expectations". In this sense, there is a "quite important consequence" as it "strengthened the Governing Council in its decisions, basically in its determination and its conviction that it has taken the right decision with QE".
On the monetary policy, the ECB acknowledged the QE measures implemented so far have "contributed to a broad-based easing in financial conditions, a recovery in inflation expectations and more favorable borrowing conditions for firms and households". Yet, there's "a long way to go" for achieving the inflation target. Therefore, "full implementation of all our monetary policy measures: is needed to "provide the necessary support to the euro area economy, lead to a sustained return of inflation rates towards levels below, but close to, 2% in the medium term, and underpin the firm anchoring of medium to long-term inflation expectation". More in Euro Rallied As ECB's Revised Higher Inflation Forecast For 2015.
In the US, the Beige Book suggested that 4 of 12 Fed districts reported "moderate" growth, 3 saw it as "modest". The rest described growth as "mixed or slight". The report also noted that a Boston, Cleveland, Chicago, Minneapolis, and Dallas District indicated "the negative impact on export sales or capital investment in segments with significant overseas exposure".
Elsewhere, Australian dollar is under some pressure after data release in Asian session. Retail sales was flat mom in April compared to expectation of 0.3% mom rise. Trade deficit widened to AUD -3.89b in April, much worse than expectation of AUD -2.11b. That's also the largest deficit on record. Exports slumped -9.1% yoy while imports rose 2.5% yoy. The set of data highlighted two challenges Australia is facing, including sluggish domestic growth and slower global demand.
Looking ahead, BoE is expected to keep policies unchanged today and would be a non event. US will release jobless claims and non-farm productivity final revision. Canada will release Ivey PMI.