Financial markets have experienced a boost following G-20 talks on Friday. Discussions were dominated by Greece as the Euro-zone country formally asked the European Union and International Monetary Fund for the anticipated rescue loan of 45 billion Euros.
Pound Sterling – UK Markets
Sterling remains at a competitive rate against both the Euro and the US Dollar, with Sterling hitting 1.16051 against the Euro (11 am). The disappointing economic growth figures released on Friday have moved Sterling less than expected as it continues its rally against the dollar, and its current position against the Euro is also very strong considering events at the G-20. As the ongoing election campaign may wield volatility, it’s advisable to speak with your currency dealer about your future requirements and whether to fix a rate to avoid risk and take advantage of the current strong position.
The most significant data release has been April’s housing data from Hometrack. Whilst this has revealed an upturn with the annual pace of growth the strongest for more than two years and average house prices rising by 1.8%, the figures also crucially reveal that homes for sale are entering the market at a greater rate than house hunters – likely to be due to the threat of economic and tax changes following the election.
The election is also preying on the minds of businesses as a survey by the British Chamber of Commerce has revealed that most companies fear the impact that a hung parliament will have on them.
US Dollar – US Markets
The dollar suffered against the single currency following the Euro’s surge on Friday and this may continue to play out today as the Dollar’s position in either direction seems to be mainly at the mercy of movements in the Euro and the Pound as they experience shifts which will continue throughout today.
Tomorrow however sees a number of data releases for the dollar including home price and manufacturing indices and consumer confidence statistics.
Euro – European Markets
The Euro bounced up on Friday particularly against the dollar and is starting to look much stronger after days of concern regarding the Greek crisis have begun to subside following G-20 talks.
The Greek prime minister has spoken positively following the Washington event and the formal call for help on Friday from the IMF and Euro-zone partners regarding emergency loans has now been made.
30 billion is expected to be donated by the Eurozone and 10 billion from the IMF to generate the 40 billion euros required in the first year of a three year loan plan.
Other Currencies – Highlights
The central message emerging from G-20 finance ministers was that global economic recovery has beat expectations, predominantly due to governments pumping money into national economies alongside the common policy effort from G-20 members. The talks were very much over-whelmed by the focus on Greece, but finance ministers also discussed the proposal to levy taxes on banks to reduce risk and pay for financial failures. No joint comment was made on exchange rates and suggestions that demands may be made on China’s currency policy did not materialize.
The ongoing unrest in Thailand is also under scrutiny this week as business districts are being targeted by protesters. This could cause Thailand to lose its BBB+ credit rating and has already caused Japanese investors, Thailand’s biggest source of foreign investment, to delay certain industrial plans. Keeping exports moving will be key to keeping South East Asia’s second largest economy moving and maintaining confidence in the currency.
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