Low expectations for EU summit by weary money markets

The money markets are still heavily focused upon Europe as we move closer to the EU summit commencing on Thursday.  Low expectations for EU summit by weary money marketsThe euro is still looking soft as concern rises that EU leaders will once again fail to make any significant progress at the summit.

The two day EU summit in Brussels is the first meeting of European leaders since the Greek parliamentary elections on June 17 and there is mounting pressure upon Germany to take decisive action on the crisis.

There has been more bad news for Europe as Moody’s downgraded 28 Spanish banks due to the sovereign debt crisis and real estate losses.

Today we see important bond auctions from Italy and Spain to further direct the movements in the euro.

Today we have the Bank of England Governor Mervyn King and colleagues speaking at the Treasury select committee; the Pound seems to be slightly bullish this morning which is always surprising ahead of Mervyn King speaking.

Data just out from the UK has highlighted that May public sector net borrowing was sharply higher at £15.58 billion and notably above the expected £14.25 billion- however the Pound is unmoved by the data.

The Pound is likely to be benefitting from the perceived negativity on the EU summit with flows moving into the pound and the USD.

Later today we have US consumer confidence for June which will give further clues to the health of the US economy, however the main attention will be set on the EU summit and any feelers on expectations for Europe.

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