USD - The dollar begins the week mixed against most of its major counterparts after the much anticipated Greek elections over the weekend proved to be a non?event. As such, currency markets are also lacking clear direction as investors await a key Fed policy decision due this Wednesday. In light of the recent softening of US economic data and the slowdown in the broader global economy, investors have begun to expect the Fed may at least extend its outlook for its current low interest rates and possibly announce a renewal of operation twist. A third round of quantitative easing is also possible with inflationary pressure quickly cooling and as employment gains stagnate. Even still, recent data shows that global central banks are rebuilding foreign exchange reserves at the fastest pace in nearly a decade, primarily crowding into the USD. Even though the Fed has created more than $2T since 2008 through its various stimulus programs, evidence suggests that there may actually be a shortage of dollars as Europe's debt crisis roils on, thus providing support. For the week ahead investors will take note of housing starts and building permits due on Tuesday and weekly jobless claims, Philly Fed., existing home sales and leading indicators all due on Thursday.

EUR - The EUR has retreated from initial gains after the conservative New Democracy party secured the much anticipated elections in Greece, winning roughly 30% of the vote. The results are calming investor fears, at least for the time being, as the pro?austerity victors will likely find enough support to form a coalition government in the coming days. However, the problems in Greece don't stop there as the new government will certainly be forced to renegotiate the terms of the country's bailout after a month of political gridlock has surely slowed the nation's austerity plans. Moreover, the new ruling party will certainly feel the collective weight of the left?wing Syrzia party, which came in second place over the weekend with 28% of the final vote, and the various other opposition parties like the neo?Nazi Golden Dawn Party, which won 7% of the vote. However, while the Greek political drama continues to play out, investors' have already moved on to the next flashpoint in the Eurozone debt crisis as Spain's borrowing costs continue to push higher with the 10?Yr note now yielding over 7% - the same threshold that once crossed prompted Greece, Ireland and Portugal to all request an EU/ECB/IMF bailout. While the EU has promised up to €100B to help recapitalize Spanish banks just last week, the nation's own public debt load looks unsustainable at such prohibitively high yields. Meanwhile, French President Hollande's Socialist Party tightened their grip on power after his party and allies won an absolute majority in parliamentary elections held over the weekend. The results raise the stakes between opposition between Eurozone leaders as Hollande will likely push for more pro?growth policies having now gained a clear political mandate at home. As such, investors will pay close attention to an EU summit scheduled for June 28th & 29th.

GBP - Sterling pulled back from early gains after the positive election results in Greece eased demand for the relative safety of British assets. British PM Cameron told reporters he sees the election results as a clear sign in terms of commitment to stay in the euro zone and to accept the terms of membership. Investors will pay particularly close attention to British CPI data due tomorrow with core inflation actually expected to tick higher while the monthly headline number declines. Jobless claims, unemployment and retail sales data are all due later this week as well.

JPY - The yen begins the week lower against the dollar, but has pared much of its initial losses as the boost in optimism following the Greek elections quickly fades. While Japanese officials have been proactive in supporting the economy through rate cuts and quantitative easing, the scope for further stimulus looks to be limited. On June 15th, the BoJ kept interest rates on hold and said that it expects the economy to return to a moderate recovery path as overseas economies emerge from the slowdown. With little major economic data due this week to push trade otherwise, the yen will continue to trade with a strong negative correlation to overall market risk sentiment.

Commodity Currencies - The commodity linked currencies remain well supported within their recent ranges this morning as immediate fears of a disorderly Greek exit from the Eurozone fade. Raw goods are mixed, but generally flat with oil at $83/bbl, gold at $1616/oz, and copper at $339/lb. The CAD begins the week down by half a percent against the USD on concerns that economic data this week will show that both the Canadian and US economies are slowing. Investors will take note of Canadian retail sales and CPI reports due on Thursday and Friday respectively with both expected to show sharp declines from their previous readings, dimming the outlook for BoC interest rate hikes. Meanwhile, the AUD pushed higher, consolidating above parity with the USD for the first time in more than a month on the modest improvement in risk sentiment. With no major economic data due out of Australia this week, the Aussie will likely continue to track overall risk sentiment.

MXN - The peso is little changed despite speculation the Mexican central bank will intervene to boost the peso should Europe's debt crisis worsen. While the peso will likely rebound as the demand for higher?yielding assets picks up, gains may be limited as uncertainty in the Eurozone persists.

RMB - The renminbi posted its largest gain in more than two months with the CNY fixing coming in at 6.3570 after the positive results of the Greek elections. The currency has now strengthened for a four straight sessions just as overseas policymakers had begun to speculate that the Chinese authorities were guiding the yuan to weaken. However, the modest appreciation appears to be in line with Chinese officials' view expectations that economic growth will pick back up in the second half of the year with full?year GDP growth managing to remain above 8%.