Greek sovereign debt issue rumbles on ahead of US non-farm payrolls today

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The second of three purchasing managers' indexes (PMI) due for release from the UK this week was from the construction sector yesterday, and was up from 53.3 in April to 54.0in May. The positive data only provided a brief respite for Sterling, which was under pressure all day following Bank of England executive director Paul Fisher's comments, who said "a further round of quantitative easing would be considered if the economy worsened".

The Greece sovereign debt story continues to dominate the headlines in the Eurozone. The EU,ECB,IMF review of Greece's efforts to cut spending and sell state assets should be complete by the end of today which will give European finance ministers nearly four weeks to decide whether Athens deserves another handout.

The Greek story continues to focus on delaying repayment of debt, rather than dealing with the actual debt so it is not a question of if the authorities will bail out Greece again but when. Another injection of cash into Greece may be positive for the Euro if past bailout's are to be used as a precedent however, German taxpayers won't be happy to pay for Greek non-taxpayers.

In the US, the (democrat) President wants to raise the debt ceiling so he can carry on with welfare spending but congress (which is republican) will not allow it unless there are cuts to spending. With neither side prepared to budge at this stage, there is a possibility the Government could run out of money on 2nd August 2011. As if to reiterate how real this might be, credit ratings agency Moody's threatened to lower the US's AAA credit rating.

Whilst Moody's actions are likely to only be threats, it did the US Dollar no favours as it fell by a cent against the Euro and lost almost a cent against Sterling late in the European trading day.

US data didn't help yesterday either. US factory fell by 1.2% in April which was worse than forecast; initial jobless claims were worse than expected at 422,000 for the week while Q1 non-farm productivity was confirmed at 1.8%, down from 2.9% in the fourth quarter of 2010.

Overnight, Australian services PMI fell (just) below the contraction/growth divide of 50. A figure above 50 suggests growth; a figure below 50 indicates contraction. The figure of 49.9 therefore had little impact.

Today see's services PMI's from Italy, France, Germany, the Eurozone, the UK and the United States. More important is the monthly change in US non-farm payrolls, seen by the markets as a marker of not just American economic direction but a pointer for global growth.