Final offer

Greater intensity
Nobody complained when Wolfgang Güllich stood in as the stunt double for Sylvester Stallone in Cliffhanger. So why is everyone so exercised about Chase standing in for Matisse in a TV talent show? And why all the excitement about that EMU meeting in Berlin?

Yesterday evening the German chancellor hosted a meeting with the Managing Director of the International Monetary Fund and the presidents of France, the European Central Bank and the European Commission. Its purpose was to put together a "final offer" (don't call it an ultimatum) to Greece. The five apparently came to the conclusion that "work must be continued with greater intensity" to achieve a settlement with Athens.

No official statement was issued after the meeting and investors are unsure whether the EU leaders might have hardened their attitude or if they spent their time trying to erase some of the red lines. Subsequent to the meeting there has been no reaction from the euro, which is a net half-cent higher on the day against sterling and quarter of a cent lower against the US dollar.

Boo, hooray
The US dollar suffered a setback yesterday morning following some strong readings from purchasing managers in the Euroland manufacturing sector and one below-forecast US purchasing managers' index. It recovered sharply when the second American PMI came in quite a bit better than expected.

Although the pan-euro-zone manufacturing PMI missed by a whisker, printing at 52.2 instead of the expected 52.3, and Germany's was down slightly at 51.1, some of the others looked rather good. Spain led the world at 55.8, a 97-month high. Holland was close behind with a 17-month high at 55.5 and Italy's 54.8 was the strongest in more than four years. 

Further damage was inflicted on the dollar by a softer-than-expected 54.0 for the Markit PMI but the (arguably) more important ISM index 15 minutes later set things right. At 52.8 it was more than a point higher on the month and comfortably above the forecast 52.0.

RBA sticks
Tuesday's economic calendar opened with a decision by the Reserve Bank of Australia to keep its benchmark interest rate at 2%, as expected. The other important data on the list are for German unemployment, UK mortgage approvals and Euroland inflation. 

There had evidently been a suspicion that the RBA might either surprise the market with another rate cut or warn of one to come. It did neither and the Aussie responded positively, adding a cent and a half to become the top performer over the last 24 hours. Investors studiously ignored the RBA's observation that "further depreciation [of the AUD] seems both likely and necessary".

The provisional Euroland CPI reading for May is pencilled in at 0.2%, its highest level this year, but should not have any real impact on the euro. Investors will be more interested in what the Troika leadership might have to say about last night's summit in Berlin. Will no news be interpreted as good news?