Euro Soft On Greece Political Climate, Aussie Recovers On Employment

Euro remains generally soft on Greece situation. EFSF, the Eurozone temporary bailout fund, said in a statement yesterday that EUR 4.2b of fund will be disbursed to Greece on May, as part of the installments agreed to back in March. That should enable Greece to pay some of the EUR 3.3b to ECB next week as well as other debt service payments. EUR 1b of fund, as seen as "not needed" before June by EFSF, will be held back and to be disbursed later in June. The issue will be revisited in a EcoFin meeting in Brussels next Monday.

On the other hand, Greek Syriza leader Tsipras gave up forming a coalition government yesterday. Tsipras said he cannot "true our dream of a left-wing government." And, he failed to reach agreements with major parties for his stance on rejecting austerity measures. and the ball is now passed to Socialist Leader Venizelos. Venizelos noted that "in the current stage of this process we cannot reach a solution but that we must continue this effort." Venizelos emphasized that "the vast majority of the country wishes to remain in the euro" and, "an exit from the euro would result in mass poverty, a loss of value of property, income and prospects." It's unlikely, though, for Greece to reach any agreement and there would be another election in early June.

The aussie, on the other hand, recovered earlier today on better than expected employment data. In April, the Australian economy added a larger than expected 15.5k jobs, comparing with consensus of -5k drop. Unemployment rate also unexpectedly dropped sharply from 5.2% to 4.9%. The unexpected improvement in the job data complicates the picture for RBA to cut rates further in Q2 after the surprised 50bps cut to 3.75% last week.

China's trade surplus widened in April to $18.4b in March. Import rose a mere 0.3% to $144.8b while exports jumped 4.9% to $163.3b. Both import and export were much weaker than expectation of 10.0% and 8.5% respectively.

Looking ahead, BoE rate decision will be a focus today but markets are expecting the bank to keep rates unchanged at 0.50% and it's asset purchase program unchanged at GBP 325b. Thus, BoE announcement would likely be a non-event. Other data to be watched include UK industrial and manufacturing production, Canada new housing price index, trade balance, US trade balance and jobless claims.