Talks between private creditors and Greek government officials continued to hold markets hostage overnight in what's looking like another week of negotiations continuing over private sector write-downs of Greek debt. 

The European summit was also in focus - like summits before, political unity is the primary stumbling block with each respective leader's attempting to douse their own spot fires. Strikes in Belgium and an increase of the cost of Portuguese debt weighed on markets overnight with some corners of the market speculating Portugal may need a second bailout with 10yr yields breaking the 17 percent mark. These developments halted the Euro rally we've seen in the last two weeks as it slipped from high of 1.32298 late on Friday, to shed over a cent and a half versus the US dollar through the Asian and European sessions.  The Australian dollar followed suit shedding 1.3 US cents through the two sessions as risk currencies bore the brunt following the summit with the Yen and Swiss Franc finding strong support. 

One of the key topics in markets widely mentioned last week was the carry trade specifically the Euro versus Australian dollar.  As the Greek debt drama drags on, coupled with the contagion threat traders need to closely watch the central banks of both Japan and Switzerland.  The SNB maintains a EURCHF floor of 1.20, and overnight the pair hit lows not seen since the days after the intervention.   The Yen also particular broke through key levels, with the Euro slipping under the 100 yen mark for a short time and the US dollar buying the lowest Yen figure since intervention last October down at 76.283, slumping 2 yen since Fridays close.

US stocks managed to pare losses closing marginally down. The S&P was down by as much as 1.2% in early trade with the EU summits fiscal reform and Greek debt dramas weighing markets down.  The late rally did see the Australian dollar regain quite a bit of momentum trading now just under 1.06 USD and the Euro also managed to pick up half a cent versus the US dollar.  Locally today we have NAB Business Confidence which at least has seen two straight positive months leading into this one and for Yen traders Japanese manufacturing PMI and unemployment rate.  At the time if writing the Australian dollar is buying 1.0598 USD.