Greece Deadlock Raises Euro Risks

Greeces leading party gave up efforts to form a coalition government, raising the risk that voters will be sent back to the polls. Markets were quiet in US trading but on the day the Canadian dollar led and the euro lagged. Australian trade data is the lone indicator on the Asia-Pac calendar but Swan also delivers the countrys budget.

Leading Greek vote-getter New Democracy had two days to put together a coalition but gave up in less than 12 hours after meeting opposition politicians. The next attempt falls to anti-Troika party Syriza. A senior party official from New Democracy said a deal is unlikely. In the event that no government can be formed an election will be called for June 10 or June 17.

The euro found some support on a report that Greece has enough money to last through July, not June as was rumored. The bulk of the euro rebound to 1.3050 was based on speculation Spain could announce a bad bank plan on Friday. The government said it will announce a decree but there is no confirmation nor details on the cost.

US news was light but consumer credit rose to a 10-year high in April, suggesting some credit-fuelled spending in the near term.

The market is squarely focused on the euro as it attempts to close the Sunday gap. EUR/GBP meanwhile closed below the 2010 low and could be primed for further declines.

Economic data is light in Asia-Pacific trading. At 23:01 GMT, comes the UK shop price index with an inflation rate of 1.6% expected. Comments from the Feds Lacker will be delivered shortly afterwards. Local markets will eye Australian trade balance at 0130 GMT. The March deficit is expected at A$1.3 billion compared to A$480 million in February. At 0930, Treasurer Swan delivers a budget that is expected to bring the country back to surplus.

-AB