Overnight Japanese GDP data has surpassed expectations and given the Yen a small boost bringing USDJPY back towards the 125.00 level after it burst through last Friday on the back of the good nonfarm payroll figure. The number was so impressive that not only did the dollar head higher, but US treasury yields spiked, especially on the shorter dated two year, which at one stage hit its highest level for over four years. Before the figure expectations for the first rate hike were at the very back end of 2015 to beginning of 2016, but this has brought this in a little to around October, but one this id for certain, we won’t be seeing the first hike next week which only 6 months ago was the favourite to mark the commencement of tightening.
Greece remains a thorn in the side of not only the Eurozone, but now the US after President Obama made clear his concern at the G7 about the heightened chances of a Greek debt default. Since missing the deadline for their first IMF repayment of the month last Friday, this Friday’s €350m deadline is moribund now that as they now insist on making all four June repayments in one at the end of the month. This is looking increasingly unlikely to happen without the funds from the agreed bailout extension earlier in the year.