Merkel "helping Europe vital for Germany"

Greece is the man point of focus once again as we start the week Germanys Chancellor Angela Merkel stated “helping indebted European countries get back on their feet is vital to Germany's economic health”, on Saturday in a message aimed at the general public.
 
The comments came a day after Germany's parliament approved a non-binding resolution supporting extra emergency loans to fellow euro zone member Greece, but only on the condition that bondholders are made to share the bailout burden.
   
Asked in a weekly podcast if the euro zone debt crisis could threaten Germany's economic recovery, Merkel said: "If we don't take action in a positive way, that could happen, but it is exactly what we want to prevent." "Therefore we should not simply allow the uncontrolled bankruptcy of a state, instead we must see how we can increase the competitiveness of countries in difficulty and give them the chance to work off the debt," she added.
   
Speaking in a more positive tone we saw comments from the ECB member Weidmann stating that “Greek private lender involvement not wrong in principle-report and would welcome a voluntary solution. A Greek Default would be difficulty for partners but the Euro would remain stable and that the ECB policy is loose.

In Turkey we have seen Erdogan win the Turkish Election with a reduced majority.

Britain's banks are in better shape than even they had imagined, according to the latest Quarterly Bulletin from the Bank of England, and are paying back their government-supported loans at a very rapid pace. According to the Bulletin, UK banks have paid back all but £37bn of the £185bn they borrowed using their mortgage-backed securities as collateral. Banks were given three years to pay back the loans and the last payments were to fall due in early 2012.

Tomorrow we have the measure of inflation as we look at the CPI figures form the UK to be inline with forecast consensus and inflation to be unchanged at 4.5%.

In China: May trade suggests more weakness in external than domestic demand Export growth came in slightly lower than expected at 19.4% y/y (Consensus: 20.4), compared with 30% in April and 36% in March.

Japan machinery orders down in April, but likely to turn up from May,  Private-sector machinery orders excluding ships and electric power companies fell 3.3% m/m in April (Mar: 1.0%), weaker than the Bloomberg median projection (+1.7%)

Pretty quite day on the economic data front but we have a keynote speaker at 14.30 US Lacker (FOMC Non Voter) Speaks on Regional Manufacturing.

Illiquid start to the week with parts of Europe out on holiday and minimal data to look forward to as the week opens. As the US entered the FX markets early on we have seen euro/$ buyers.  European corporation selling euro/chf as 1.2000 is a psychological barrier to the downside, touching further on the CHF over the weekend there was and articles in the Swizz press stating that some Switzerland business leaders have fears of parity with the Euro.
 
Cable looks set for a gradual move lower over time there are targets for a close below 1.6215 as it sights are set at 1.6060 which was 24 May low.

Looking at commodities Gold has fell to its lowest level in about 10 days this morning as the euro eased against the dollar, but concerns about the euro zone debt crisis sustained investor interest in the precious metal as a safe store of value. Bullion fell almost 1 percent on Friday, its biggest one-day decline in a month, due to a rally in the dollar and broad commodities losses, we are currently trading at 1528 and silver at 35.83.

Look at Oil Wall Street Journal’s Selina Williams reports that U.S. crude prices fell as Saudi Arabia's pledge to supply more oil to buyers in July continued to weaken prices. Brent crude was up, but only slightly, as the differential between the two contracts widened to fresh levels.

Ahead of the New York day, the front-month July contract on the New York Mercantile Exchange was down $1.19, or 1.2%, at $98.10. The front-month July Brent contract on London's ICE futures exchange was up 23 cents, or 0.2%, at $119.01 a barrel.

Although it was already known Saudi Arabia intended to raise its crude oil output to 10 million barrels a day in July and had already started offering increased supplies to customers in Asia, it's expected to keep feeding into prices Monday in the absence of any other news.