IForex Daily : July 07, 2014

 | Jul 07, 2015 03:55AM ET

Following the outcome of the referendum, the Greek Prime Minister said Athens was returning to negotiations with the goal to reopen banks, which could run out of cash within days without emergency funding from the ECB. Also, the Greek government announced that Euclid Tsakalotos will be replacing Yanis Varoufakis as the nation's new finance minister. Greece received hard news from IMF Managing Director Christine Lagarde on Monday that policy prohibits lending to countries that have missed payments, although it can offer technical assistance to the staff. Meanwhile, the European Central Bank said it will keep the amount of emergency liquidity available for Greece unchanged. European officials have indicated that they will only continue to finance Greece in return for economic reforms. Currency traders now await Tuesday's critical emergency summit in Brussels between Greece and its European creditors for further indications on the likelihood of a Greek bailout. Elsewhere, the dollar posted slight losses against most major currencies on Monday, after data showed that U.S. service sector activity slowed in June, however, ISM non-manufacturing data rose to 56.0 last month, up from 55.7 in May but below forecasts for 56.2. For today, the Swiss National Bank is to publish data on its foreign currency reserves, the U.K. is to release data on manufacturing and industrial production, while Canada and the U.S. are to release reports on the trade balance.

EUR/USD

The euro, posted a sharp drop on Monday after the Greek referendum results, however the EUR/USD pair remains supported above 1.10 as investors are awaiting for the outcome of the critical emergency summit in Brussels, and the possibility of a Greek bailout. Capital controls were extended and Greek banks will remain shut at least until the end of Wednesday while the country also received bad news from IMF Managing Director Christine Lagarde on Monday that policy prohibits lending to countries that have missed payments, although it can offer technical assistance to the staff. The dollar was also under pressure on Monday, after data showed that U.S. service sector activity slowed in June, while ISM non-manufacturing data rose to 56.0 last month, up from 55.7 in May but below forecasts for 56.2. Later in the day the U.S. is due to release data on trade balance, however market sentiment will probably be driven by the outcome of the emergency meeting in Brussels.