So Greece and the EU have got themselves a deal. Whether this is down to actually doing something affirmative for each other, or more likely, because of the dreaded alternative, remains to be seen. With an election just 2 months away and a whole new set of politicians likely to be running the country, it is difficult to become overly enthusiastic about the eventual outcome of the whole fiasco. Certainly the performance of the markets following the press conference has been underwhelming, with the European Equity markets closing slightly lower and the Euro unable to reach last week’s 1.3320 high. The US markets are pretty flat (S+P +0.3% following Wal Mart’s uninspiring results, (which reflect a pretty flat US retail economy)

With the increasing social unrest in Greece and the general feeling that the correct way out of the mire would be a plan that promotes growth, not austerity, there is plenty of mileage left in this story. To quote the head of the German IFO today, taken from the UK Telegraph: “The politicians know the second bailout can’t save Greece. They want to gain time until the next election. I think we’re wasting time by doing this. Greece’s external debt is rising with every year that passes until it leaves the currency union. We’re getting ever further away from solving the problem.” - I guess that pretty much sums it up.

The Euro has been a bit of a damp squib. It feels as though the market is just relieved that it the meeting is over and has decided it needs a rest. The 24 hour range of just 110 pips tells its own story. We currently sit in the middle of the range, and look like doing so for the next few hours. Sellers are reputedly lining up above 1.3300, while buyers are at 1.3160/70.  In the more medium term, price action looks to be squeezing into a more narrow range, which looks likely to be the prelude to a breakout and something more directional. It could be that we are forming a reverse Head/Shoulder bottom, with the neckline drawn (white) and if correct, would give us an objective of up at around 1.4000. If this were to be the scenario though, it needs to happen more or less immediately, as the formation is more or less ready to go. Otherwise we may play out some further range trading within the 1.3030/1.3370 parameters between the 2 white lines. For the coming session use this as a wide range. Asia is more likely to be contained within 1.32/1.33 unless something new hits the wires.

Data wise, we see the HSBC China  Mfg PMI and then later German/EU Mfg & Services PMI and EU Industrial Orders. and US Existing Home Sales

here isn’t much to say on the Aud. It continues in its flat corrective mode, chopping around either side of 1.0700, although it should be noted that it has broken below the lower band of the medium term upchannel that began at 0.9890.

Nothing is likely to happen this morning until we get the HSBC China Mfg PMI data where a reading of 48.8 is expected. The Aud will take its direction accordingly, but the 4 hour charts are hinting that we may want to test mildly lower levels.

Until then I would imagine that 1.0650/1.0700 ought to cover it, although it currently looks a little heavy.

In the bigger picture, the 1.0630/1.0800 range still largely covers the flat corrective range. If we see a break below 1.0630, expect bids to emerge at 1.0610 where the base of the corrective channel currently lies. Below here 1.0590/1.0600 should also see bids.