rahul.khanna's picture

Economic Outlook For The Major Currencies

The discussions on Greece are to continue into the weekend with a Euro group meeting scheduled on Saturday. A deal seems more likely than not. However, failure to strike a deal before the month end will lead to an end to ELA (emergency liquidity assistance) to the Greek banks and capital controls. Untill a resolution is reached, USD is likely to be the currency to remain long.

Mark Carney, BoE governor, is due to speak at 1415GMT today, any comments regarding the interest rates or the UK economy, being on the hawkish side, will lift GBP.   

US personal spending (May) data on Thursday, came out above the expectations, suggesting that a strong US Q2 growth is a likely possibility. The likelihood of a Fed lift off, as soon as September, has risen as a result.  Next week, ISM and employment data will probably shed more light on an improving economy. If the next week's data confirms the above view, we are likely to see the Dollar gain.

Japan's unemployment rate reached an 18-year low at 3.3%, below the expected 3.4%. With Japan now nearing full employment, hopes are of rising inflation and improved economic outlook. Hence, JPY is likely to gain, except vs the USD, as USDJPY will likely be driven by the expectations of the first Fed rate hike.