Article by ForexTime

The EUR/USD currency pair notched up a five-day low at 1.1065, before bouncing during the European trading session back to the 1.1125 which coincides with Monday’s low. Reports that the IMF is threatening to hold back its portion of the aid package that Greece is trying to secure has rattled the euro. Reports say that the IMF thinks Greece remains far from meeting the conditions of its bailout. This follows news reports from weekend negotiations that fundamental differences remain between the Greek government and creditors, particularly on pension reform and privatization proposals.

Austria’s finance minister Schelling reports progress with Greece, but couldn’t say whether there will be a deal in place by the May-11 Euro group meeting, which is the deadline by which EU commissioner for economic and financial affairs. He said that Greece has changed positions on some areas but not others. The problem is that the Greek government is ideologically at opposites with its creditors. If it fails to reach the honorable agreement, it will likely call a referendum, if not an election.

In economic news, Spanish unemployment dropped more than expected, by 118.9k in April, nearly double the 60.2k decline seen in March and much better than the median forecast for -60.5k. This is further evidence that the Eurozone recovery is occurring at the periphery, and not just in the core.

US data could also drive currency action. The U.S. Non-Manufacturing ISM is scheduled for Tuesday to round out the month’s producer sentiment measures. The headline is expected hold steady at 56.5 from March. This would match the behavior of the ISM manufacturing which held steady at 51.5 from March. Overall, producer sentiment for the month remains depressed relative to recent levels.

Article by ForexTime

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