US dollar advances as Greece defaults on IMF payment - 1.7.2015

US stocks rebounded on Tuesday on hopes that international creditors and Greece may come to last minute agreement to avert default. S&P 500 and the Dow Jones Industrial Average rose 0.3% and 0.1% respectively after falling to 200-day moving averages on Monday and recording monthly and quarterly losses. The dollar strengthened with ICE US dollar index gaining 0.6%. US economic news were mixed. US house prices measured by Case-Shiller composite index rose in April, but the gain was lower than expected. The Chicago PMI rose in June but stayed below the 50 level, indicating deterioration in manufacturing conditions for the fourth month this year. US consumer confidence recorded better than expected rise in June according to Conference Board report. Investors will be watching closely the official jobs report tomorrow to gauge the performance of the job market. The Federal Reserve statement last month indicated the timing of interest rate hike will depend on pace of improvement in job market. Today at 12:00 CET Mortgage Applications will be released in US. At 13:15 CET June ADP employment change will be released. The tentative outlook is positive. At 15:00 CET June ISM Manufacturing PMI and Prices Paid will come out. The tentative outlook is positive. And at 15:30 CET Crude Oil Inventories will be released.

European stocks continued falling as euro fell and Greece missed the 1.54 billion loan repayment to the International Monetary Fund on June 30. The Stoxx Europe 600 fell 1.3%. Germany’s DAX 30 fell 1.3% recording 8.5% loss for the second quarter, France’s CAC 40 ended 1.6% lower and closed the quarter with a 4.8% decline. IMF said it will provide further funding to Greece only after the arrears are cleared and confirmed that Greece asked for a last-minute repayment extension earlier on Tuesday which will be considered in due course. To ensure a technical default is not triggered, Greece proposed a two-year agreement with Europe’s bailout fund to cover its financing needs and restructure its debt, requesting the bailout extension by the Eurogroup until this loan is agreed. German Chancellor Angela Merkel said Germany won’t negotiate a new bailout program ahead of July 5 Greek referendum. Eurogroup will discuss Greece’s new aid request at today. Inflation in euro-zone fell to 0.2% from 0.3% in May, while German retail sales continued to rise in May and jobless claims fell further in June. Today at 8:55 CET June final manufacturing PMIs for Germany and euro-zone will be released. The tentative outlook in neutral.

Nikkei gained 0.5% today as yen weakened against the dollar and central bank’s “tankan” survey showed big businesses intended to increase capital spending at fastest pace in a decade. Tomorrow at 0:50 CET foreign and domestic purchases of bonds and stocks will be released in Japan.

Oil prices are falling today after jumping yesterday as the deadline for Iran’s nuclear program agreement was extended by a week. Official data from China indicated oil demand in May increased by 8.2% from a year earlier while activities in factory sector expanded slightly with the official Purchasing Managers' Index reading at 50.2 in June, unchanged from May level.

Grain prices rallied after US Department of Agriculture data indicated below expectations stocks and plantings.

Gold prices are rising today after falling to lowest level in over three months on Tuesday.