Who will save Greece?
Euro-traders will undoubtedly be well and truly fed up with the ongoing shenanigans in Greece. Yes, the nation has a wealth of fascinating historical curiosities and feta cheese tastes lovely in a Chickpea Bourekia – but the whole fiscal collapse just isn’t sitting right with anyone. Today, fantastically-named German Finance Minister Wolfgang Schaeuble and his French counterpart Christine Lagarde threw cold water on speculation that there will be a decision on aid for Greece at a two-day meeting in Brussels. Last Monday Nicolas Sarkozy said that he agreed the Euro-Zone should help Greece out. This got the single currency off to an optimistic start to the week whilst the pound also faired well against a subdued dollar. Then UK house prices turned up uninvited with no booze or biscuits and spoiled everyone’s fun. Worse than expected data sent sterling below the USD1.50 mark but by Friday it managed to move over USD1.52 following news that an opinion poll indicated an outright Conservative majority. Needless to say, if the pound could vote, it would be opting for Tory. However, the weekend’s polls are once again pointing towards a hung parliament which is not good at all for UK currency. To add to sterling’s woes, Moody’s ratings agency confirmed that the UK’s fiscal position has been subject to “extreme deterioration” - all very scary stuff for sterling supporters. As for the dollar, the start of the week saw some strength on the back of solid employment figures from the previous Friday. Then things went a bit quiet with not a lot of news emanating from across the pond. On Thursday traders were treated to a veritable symphony of critical economic indicators including such classics as the US Trade Balance Report and the weekly unemployment claims. Disappointingly though, the day produced a mixed bag for the dollar, leaving it trading lower against majors on the Friday. This week it will be wise to keep an eye on political polls, chatter and Gordon Brown’s every move as indicators as to which way the election will sway will be critical to sterling’s progress. Have a great week.