It’s a day of jubilation and uncertainty all rolled into one for Greek voters today with the national soccer team’s defeat over Russia overshadowed by what could mark the end of Greece and the European Union as we know it. In what is essentially a referendum to the people to decide if Greece will remain under the Euro-Zone umbrella, voters will today head to the polls for the second time after May’s election failed to create a cohesive government. The premise of a global coordinated effort to minimize collateral damage should the anti-austerity vote succeed has provided support across markets with both European and U.S equity markets finishing the week in solid form, nevertheless it remains to be seen just how effective such efforts will be considering the extreme nature of the event. While victory for the pro-euro conservative parities may provide short-term relief and a sense of political closure, it’s clear the economic plight of Greece and indeed the Euro-zone will remain under siege as markets continue to reject Euro-zone leader’s attempts to contain the rot. A majority vote for the anti-bailout Syriza party will be seen as a vote against the ‘austerity-for-cash’ agreement in place, therefore sharply increasing the chances of Greece exiting the Euro-zone – in turn forcing coordinated intervention given expectations of an extreme capital flight to safe haven assets. This is mind, in the absence of a crystal ball the only certainty when Asian markets open for business on Monday is that of volatility.

Most importantly, whatever the Greek election may bring, another week of Euro-dominated headlines is a certainty and will remain a primary directive for currencies. Strength across global equities increased risk currency appeal on Friday with the Euro finishing close to intra week highs, while the Australian dollar has made a sustained break above parity to finish the week at 100.76 US cents, representing just over 1-month highs. Similar moves were noted across commodity bloc currencies with the Kiwi and CAD finishing the week on a solid footing.

Germany’s DAX finished 1.48 percent higher while French stocks outperformed with the CAC closing up 1.82 percent on the day. Across the Atlantic, the S&P and DOW also record solid gains finishing 1.03 and 0.91 percent higher.

U.S stimulus expectations have also underpinned gains, with the recent string of less-than-inspiring economic feedback further supporting the argument the Federal Reserve may soon embark on another round of quantitative easing. The week ahead will see conjecture over U.S stimulus remain a primary theme with the FOMC rate decision on Tuesday which at the very least will see Bernanke and Co keep interest rates near zero while maintaining their ‘exceptionally low federal funds rate through to 2014’ mantra. The health of the housing sector under the microscope with housing starts, building permits and existing home sales on the docket and the Philadelphia Fed manufacturing Index will also be of considerable interest later in the week. Headlining local event risk this week will be Tuesday’s RBA minutes for June and the HSBC Flash China PMI on Friday. Also in focus this week will be feedback from the G-20 meeting in Mexico with will commence on Monday.

A global push for safety has manifested in a decidedly different way from the usual flight to low yielding asset classes with investors squaring up short exposure ahead of the Greek elections on Sunday. We’re seeing a general reluctance to hold/build short positioning in the lead up to Greece’s elections which continues to force a squeeze of shorts in the market. U.S stimulus expectations and a report suggesting imminent central bank action have also seen investors attempt to take a neutral stance ahead of such critical event risk. A Reuters report suggesting a global contingency plan is in place to provide much needed liquidity should Greece’s elections fail to yield the desired result has also provided some inspiration across markets, with a notable Euro rally seen in the ensuing period.

It was another day of pain for Spanish markets with 10 yr yields topping the 7 percent mark, representing the highest level of borrowing costs since the Euros inception. This 7 percent level is a particularly important psychological milestone for investors which marked a request for financial aid from Greece, Ireland and Portugal. Although Spain has already sought financial assistance for the troubled banking sector, diminished appeal for Spanish government debt may see a sustained break above the 7 percent region suggesting a sovereign bailout is just around the corner.

A subdued U.S inflation print and less than inspiring weekly jobs report kept the quantitative easing dream alive for U.S markets overnight which provided natural resistance for the U.S dollar, in-turn providing a platform for risk currencies such as the Australian dollar and Euro to move higher. U.S Consumer Prices rose at an annual pace of 1.7 percent in May, down from 2.3 percent in April. Economists had anticipated a slightly higher reading of 1.8 percent. Core inflation rose 2.3 percent on year in May matching last month’s gain.

The Euro made a break to the upside of $US1.26 earlier this morning and currently remains supported above the figure. We’ve also seen the Aussie dollar intermittently test U.S dollar parity overnight with heavy resistance at the figure broken in the last hour forcing a further squeeze of short positions and weaker hands in the market. U.S equity markets outperformed with the DOW and S&P rising 1.24 and 1.08 percent respectively despite general weakness earlier across European equity markets.  At the time of writing the Aussie dollar is buying 100.25 US cents, 79.3 euro cents and Y79.5.

A series of negative themes kept risk currencies in check overnight with less than inspiring data from both side of the Atlantic continuing to weigh on global equity markets. While intermittent gains across the risk currencies may reflect a stronger appetite for risk, there remains a general reluctance from market participants to establish new long-side positioning. In essence, we’re seeing a short squeeze on risk currencies such as the Euro in an attempt to neutralise positioning ahead of critical event risk headed up by Greek elections over the weekend. Also critical to the short-term Euro fortunes is an Italian bond auction on Thursday which remains a key point of contention across markets given the contagion risk from Spain. Both Italian and Spanish borrowing cost continue to reflect a decidedly nervous market atmosphere with 10-yr yields rising to 6.22 and 6.77 percent respectively. European equity markets were mixed on the day with the FTSE rising 0.18 percent while the CAC and DAX fell 0.55 and 0.14 respectively.

After making another attempt to break US dollar parity, the Aussie dollar followed U.S equities lower in the latter hours of trade overnight alongside commodity counterparts the CAD and Kiwi. Heavy resistance ensued at parity before taking a leg-down alongside U.S stocks with the S&P erasing earlier gains to finish 0.7 percent lower. News of Moody’s downgrade of Spain and Cyprus also prove to be another hindrance on sentiment a day after Fitch downgraded 18 Spanish banks citing distressed loan exposures to construction and real-estate markets.

Nevertheless, this short squeeze allowed the Euro to move higher despite persistent anxiety from the region. The EURUSD pair made a break above resistance of $US1.2525 to highs of $US1.2610 before easing back below the figure in recent hours.

Across to the U.S, global uncertainty continued to hurt U.S retailers according to the latest trade report with sales falling 0.2 percent in May, against a previous downward revision of 0.2 percent. U.S producer prices recorded annual growth of 0.7 percent in May, falling short of the 1.2 percent growth expected, while the core prices rose were unchanged at 2.7 percent, slightly lower than the 2.8 percent estimated.

Local data today includes consumer inflation expectations with Japan due to release industrial production number this afternoon. At the time of writing the Australian dollar is buying 99.5 US cents, 79 euro cents and 79 Yen.

Despite strength across the risk spectrum overnight, concerns from the Euro region continued to bubble away with Spain remaining front row and centre. With still many questions of Spain’s bailout terms left unanswered, the post-bailout rally has been marred by anxiety over the potential contagion effects for other debt ridden nations with Italy the next in the firing line.  Although the bailout will be engineered to rescue ailing Spanish banks, the intrinsic link between banks and the sovereign itself remains of primary concern with fears of an imminent spill-over. Spanish borrowing costs continuing to rise overnight night with yields forging new Euro-era highs of 6.83 percent. A day after downgrading two of Spain’s largest banks Santander and BBVA, ratings agency Fitch followed through with a further downgrade of 18 Spanish banks overnight citing loan exposures to construction and real-estate markets.

The constant negativity across the Atlantic failed to cap strength across U.S equity markets with the DOW and S&P rising 1.31 and 1.17 percent respectively.  Currencies resembled similar positivity with the high-beta Kiwi and Aussie dollar’s both rallying in unison. The Euro saw moderate upside but stopped short of selling activity around the 1.2525 level. The key inflection point for risk overnight came from Fed Chicago President Charles Evens who threw his support behind further initiatives to support US jobs, including further asset purchases in the form of both operation twist and quantitative easing. Still, with a treasure-trove of hurdles in the near-term including Greek elections on June 17, any strength mustered markets remains tentative at best. Local economic data today includes the Westpac Consumer confidence index due for release at 11.30am. Also in focus today will be a speech by RBA Governor Glenn Stevens to the Prime Minister’s Economic Forum in Brisbane.

Risk currencies reluctantly clawed back losses overnight headed up by moderate gains from the Euro. In economic news, Euro-Zone producer prices were flat in April against an expected rise of 0.2 percent. The inflation indicator showed a steep annual fall to 2.6 percent from a revised 3.5 percent in March. Adding to Friday’s less than inspiring jobs and manufacturing data, U.S factory orders slumped 0.6 percent in April led by a 2.1 percent drop in core capital goods. Economists had anticipated a moderate rise of 0.2 percent.

Following on from Friday, the latest soft patch in U.S data is a primary driver of greenback demand with quantitative easing expectations promoting USD weakness, assisting the Euro to regain ground; nevertheless we consider a move higher across commodity bloc currencies and the Euro more of a case of short covering rather than a material shift in sentiment. There’s also some speculation European leaders may take further measures to combat the latest downward rout in an emergency G-7 meeting scheduled for this evening.

The Australian dollar has returned above the 97-handle once after falling to 8-month lows on Friday. The local unit rose to highs of 97.47 US cents alongside the Euro which is currently testing $US1.25-figure despite noise from ratings agency S&P saying Greece as a one-in-three chance of leaving the Euro-Zone.

Local markets are bracing for a big day of event risk to govern Aussie dollar movements with the RBA Rate decision headlining at 14:30 AEST. In short, markets consider a 0.25 percent cut a certainty, with growing calls for a second consecutive 0.50 percent cut. With this easing bias in place, the Australian dollar is at a prime vantage point to make a short and sharp shift to the upside should the RBA fail to deliver.  While it’s clear subdued inflationary pressures have afforded the RBA ample breathing space to ease monetary policy, the question remains; does the board consider deterioration so great a 50bps cut is required to step ahead of the curve? Whatever the result, Stevens and Co have a lot to mull over and Tuesday’s policy decision at the very least promises to induce significant volatility from the local unit. Earlier this morning we have the AIG performance of services index, current account balance and net exports of GDP. HSBC will also release PMI services data this afternoon.

Global markets discovered a whole new phase of weakness on Friday led by much lower than anticipated jobs growth in the U.S. Equity markets tumbled as U.S non-farm payrolls for May rose by 69,000 – a meager result in comparison to the 150,000 new jobs expected. Volatility was the key theme across currencies with significant U.S dollar strength noted across major counterparts in the ensuing period of the jobs data; however gains were unwound throughout the session as market participants began to recalibrate quantitative easing expectations. U.S 10-year treasury yields dropped to an all time low of 1.437 percent while across the Atlantic the safety of German debt saw milestone lows with 2-year yields dropping below zero. Quite simply, investors are willing to forgo return on capital investment in exchange for a safe place to park funds.

It was a session of milestones across currency markets with the Euro slumping to a fresh 23-month low of $US1.2285 before regaining composure over the course of trade to finish the week at $US1.2432. Sterling recorded an impressive drop against the greenback to near 5-month lows of $US1.5267. The Australian dollar fell to new 8-month lows of 95.81 US cents to break previously robust support at 96.6/7 US cents. The local unit managed to claw back losses closing at 96.95 US cents – finishing the week 0.52 percent lower. Japan’s Yen remained to safe haven of choice with the USDJPY pair breaking ¥77 handle to near 4-month lows of ¥77.65.

The week ahead will see the focus turn to central banks, with the RBA, ECB and BoE holding their respective policy meetings. While the ECB and BoE are likely to keep rates unchanged, calls are growing for the RBA to slash a second consecutive 50bps cut from the official cash rate. Since the last meeting economic turmoil from the Euro-region has gained momentum, while more recently negativity from the United States has resurfaced with last week’s jobs taking the sheen off what has generally thought to be modest recovery. To add to the RBA’s conundrum local factor continue to plague markets with industry unrelated to the mining under pressure amid signs of slowing in China adding to market pessimism. On Friday, Chinese Manufacturing data once again raising doubts over the growth sustainability in world’s second largest economy. Manufacturing PMI fell to an index level of 50.4 in May from 53.3 April. Economist’s consensus estimates showed a more moderate fall to 52 expected.  The HSBC equivalent released later on Friday which is sampled on smaller to mid-tier companies also reflected slower manufacturing output.

While it’s clear subdued inflationary pressures have afforded the RBA ample breathing space to ease monetary policy, the question remains do the board consider deterioration so great a 50bps cut is required to step ahead of the curve? Whatever the result, Stevens and Co have a lot to mull over and Tuesday’s policy decision at the very least promises to induce significant volatility from the local unit. It’s a comparatively quiet week from the U.S with Factory Orders, ISM services, Beige Book, Consume Credit and Trade Balance among the data highlights. Across to Europe, alongside the usual headlines surrounding the economic turmoil in southern Europe, markets will be watching the European Central Bank interest rate decision on Wednesday which is expected to remain at 1 percent. Preliminary Euro-Zone GDP, Retail Sales and Germany factory orders are also on the docket.

A series of less than inspiring data points made for a choppy session overnight with U.S equity markets finishing the last day of the month with moderate losses. Earlier in European trade, we saw a bounce across the risk spectrum which failed to gain momentum in U.S trade with the DOW and S&P finishing down 0.21 and 0.23 percent respectively. Nonetheless, some signs of positivity were seen in Europe with markets finding solace in the latest jobs data from Germany which recorded no change in May against the expected decline of 7,000. The official unemployment rate edged lower to 6.7 percent, the lowest rate of unemployment in two-decade – a comforting factor considering the economic turmoil in Southern Europe. German retail sales recorded the second consecutive month of gains with April’s print showing a rise of 0.6 percent but still record a significant fall of 3.8 percent from a year earlier. Euro-Zone inflation slowed further in May with official estimates showing consumer prices rose 2.4 percent, down from 2.6 percent in April.

In contrast we saw data from the U.S prove to be more of a hindrance, with the ADP private employment gauge falling short of estimates showing 133,000 new jobs in May against expectations of 150,000. We also saw weekly jobless claims come in above estimates with both data points seen as a negative pre-cursor ahead of Friday’s NFP’s. U.S GDP recorded annual growth of 1.9 percent in the first quarter, down from previous estimates of 2.2 percent.

The Australian dollar fell to lows of 96.72 US cents in domestic trade but managed to stage an ascent overnight to reach highs of 97.7 US cents before succumbing to moderate selling in the latter part of US trade. The Euro followed a similar pattern with emphasis on the selling with the EURUSD pair failing to build momentum above 1.24-figure before posting fresh 23-month lows of 1.2336 in recent hours. Locally, the focus today will be on China with manufacturing PMI due for release this morning alongside the HSBC equivalent later in the session.