The spotlight stays on Greece, China this week

Greek national flags fly above Greek-themed hats at Syntagma square in Athens, Greece.
Kostas Tsironis | Bloomberg via Getty Images
Greek national flags fly above Greek-themed hats at Syntagma square in Athens, Greece.

The week is set to start in a dramatic fashion, with markets digesting the outcome of a last-ditch effort in Europe to avert a Greek default and a cut in the benchmark interest rates by China's central bank.

Over the weekend, Greece failed to strike a deal with its international lenders to secure more emergency funding, which it desperately needs before June 30 to repay its loans. The collapse of negotiations on Saturday has forced Greece to introduce capital controls and keep its banks shut.

The debt-stricken nation will now be headed for a bailout referendum on July 5, authorized by Greek lawmakers on Sunday. A yes vote will mean that Greeks are willing accept the latest bailout terms offered by creditors to Athens, while a rejection will likely increase Greece's chances of exiting the Eurozone.

In early Asian trade, the euro fell nearly U.S. cents to a one-month low around $1.0971, from around $1.1165 late on Friday. Dollar-yen dropped 1.2 percent to a one-month low of 122.34.

Meanwhile, U.S. stock index futures opened down 1.6 percent as chances of a Greek default heightened.

Read MoreHow should the Greeks vote?

"The referendum vote stretches out the resolution of this story another week unfortunately and the referendum vote will be 'yes' on staying with the Euro, but likely 'no' on higher taxes and cuts to spending and pensions," Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi, wrote in a note early Monday.

"We assume at the worst point the euro could fall to $1.09, and Spain and Italy bond yields rise back to 2.5 percent or so for each. But we don't see contagion risks [and] think [Greece] has to actually pack their bags and leave the Eurozone to cause more damage to the markets," Rupkey added.

Meanwhile, the People's Bank of China (PBOC) lowered its benchmark lending rates by 25 basis points to 4.85 percent on Saturday, marking the fourth reduction since November, in an effort to prop up a slowing economy.

The PBOC also reduced one-year benchmark deposit rates by 25 basis points to 2 percent, it said in a statement on its website. The rate cuts come on the back of a dramatic 7.4 percent plunge on Friday, which saw the benchmark Shanghai Composite index nursing its worst single-day loss since January 19.

Read MoreGreece takes rescue talks to the wire

Pulse check: China, Japan

In Asia, a flurry of economic indicators is on tap from the region's two biggest economies.

Japan kicks off the week with May industrial production and retail sales data, which are expected to show the country's recovery slowing in the second quarter following a stronger-than-expected gross domestic product (GDP) for the first three months of 2015.

Japan's economy expanded at an annualized pace of 3.9 percent in the January-March quarter, beating the government's initial forecast of 2.4 percent growth.

According to estimates provided by Moody's Analytics, retail sales likely increased 1 percent on-year last month, well below April's 5.0 percent rise. Industrial production likely rose 0.5 percent in May, down from the 1.0 percent gain in the preceding month.

On Wednesday, markets will receive two sets of Chinese factory activity data for the month of June; the official purchasing managers' index (PMI) at 0900 SIN/HK and the HSBC final PMI reading 45 minutes later.

Last week, HSBC's preliminary reading of the mainland's manufacturing activity came in at 49.6, above the 49.4 forecast in a Reuters poll, but still below the key 50 level which separates contraction and expansion.

Elsewhere in the region, Australia releases May retail sales and trade figures towards the end of the week, while South Korea is due to put out last month's industrial production, retail sales and consumer price index (CPI).