Euro pushes higher on Greek bailout progress

Progress between Greece and its lenders finally seemed to be gathering pace as French President Francois Hollande commented on the possibility of negotiating a deal that would release much needed bailout funds for the indebted nation. Speaking ahead of the two day summit of EU leaders in Riga, Latvia yesterday Mr Hollande expressed his commitment to finding a long term solution that would “restore confidence and release the funds that have been planned”. The euro managed to stabilise yesterday as investors were encouraged by the prospect of an impending agreement after months of negotiations. After selling off against the dollar since the start of the week, yesterday saw some modest improvement, however, intraday gains towards 1.1181 in breach of the 100 day MA were unable to take root. Activity this morning has seen the single currency gain additional upside momentum, trading back towards 1.1170 against the dollar early on and we could see the euro recover ground towards 1.1500.

Cocoa futures continue to gain substantial upside momentum as concerns of delayed shipments from West Africa spark a flurry of buying interest. ICE second month cocoa futures have rallied almost 18% since the start of April when prices traded towards their year-to-date low as worries of tighter supply and a disappointing crop saw buying interest improve substantially throughout the second quarter of the year. Ghana has been particularly affected by a combination of supply concerns with bad weather, pest and logistical issues prompting the Ghanaian Cocoa Board to revise crop estimates lower by 15% last month.

The pound sterling rallied 0.8% against the dollar yesterday after halting losses against the dollar on Wednesday, finding support towards 1.550. Stronger than expected retail sales data was behind the drive higher with retail sales excluding fuel rising 1.2% m/m in April, far better than the modest 0.2% m/m increase expected by market participants. The strong data went some way to restore confidence back in the market after disappointing inflation data released earlier this week indicated that inflation turned negative for the first time since records began in April. With stronger retail sales many viewed last month’s price declines as short lived and the hopes of inflationary pressures returning could see further improvement in the UK economy.

EUR pushes tentatively higher after rebound

EUR Curncy Euro Spot Daily 22 2015 05 22 07 31 41

Cocoa futures extend rally on supply concerns

CC2 Comdty Generic 2Nd CC Fut 2015 05 22 07 40 45

UK retail sales exceed expectations in April

UKRVAMOM Index UK Retail Sales 2015 05 22 07 48 52

Events for today

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Q1

GDP

0700

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Q1

Imports & Exports

0900

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May

IFO Business Climate

0930

UK

Apr

PSNCR & PSNB

1330

US

Apr

CPI Index

1445

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May

Markit Manufacturing PMI

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Jun Crude WTI (NYMEX)

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Jun Copper & Gold (COMEX)

Topics: USD, ECB, GBP, Cocoa
More from: Kash Kamal