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For North American traders, it will be a shortened trading week broken up by July 4th or Independence Day on Wednesday. The mid-week nature of this holiday means that most U.S. traders will either take the entire week off or come into work for only 2 days. Although our desks will be manned the entire week, if we were to take time off, it would certainly be Monday and Tuesday and not Thursday and Friday. The reason is because it's a busy trading week filled with market moving events and economic data, the most important of which are due at end of the week. The agreement by European leaders to directly recapitalize banks helped to restore confidence in European assets and prevented an exacerbation of Europe's debt crisis. Without today's announcements, currencies and equities would be trading at much lower levels, putting us in a very different position as we head into the new trading week.

The outcome of the European summit has global ramifications not only for asset markets but also policymakers around the world. Three central banks have monetary policy announcements next week and each one of them have attributed part of their dovish monetary policy statement to the Eurozone's debt crisis. Now that there has been some relief, there is also less pressure on these central banks to cut interest rates or increase their asset purchase programs. The Reserve Bank of Australia, the Bank of England and the European Central Bank will have a lot more breathing room this week and could very well reserve their stimulus for a more desperate time in the global economy.

The past week has been focused on Europe but this should change to some degree with non-farm payrolls and other important pieces of U.S. data on the calendar. Job growth is expected to remain weak but economists are looking for a small uptick after 2 months of particularly bad NFP reports. In addition to payrolls, manufacturing and non-manufacturing ISM reports are scheduled for release along with factory orders and the usual leading indicators for NFPs. This morning's U.S. economic reports were mixed. Personal incomes grew by 0.2 percent in May, same pace as the previous month while personal spending remained flat. The PCE, a measure of inflation dropped 0.2 percent while core prices rose a mere 0.1 percent. Consumer confidence was revised lower according to the University of Michigan report but manufacturing activity in the Chicago region accelerated slightly. As with most of this week's U.S. economic reports, the changes are not significant enough to alter the Federal Reserve's outlook for monetary policy.

Source: FX: Prepare For Short But Busy Week