Greece's rescue package is secured amidst protests
This weekend saw Greece’s EU rescue deal being signed off as the German cabinet agreed to their contribution of 22.4 billion Euros. This has come amidst a round of contentious Greek budget cuts that were necessary to secure the loan inciting a wave of protests over Greece.
Pound Sterling – UK Markets
Sterling’s movement has been relatively subdued so far this morning following the bank-holiday weekend with Sterling slipping only slightly against the Dollar. This may be due to market participants being wary of taking strong positions on Sterling ahead of Thursday’s election.
Today there will be a release of UK data from the Bank of England including the M4 Money Supply measuring all Sterling in circulation, Mortgage approval statistics and UK Net Lending for March. There will also be figures released on UK manufacturing figures and consumer credit.
US Dollar – US Markets
The U.S Dollar has experienced another wave of positive data and is expected to continue to benefit from the ongoing weakness in the Euro.
Although the U.S first quarter figures are as yet incomplete and may be revised, they give strong signs of continued economic recovery. Manufacturing has expanded in the US in April at the greatest rate since June 2004, construction spending increased in March and both the factory index and factory employment index have risen.
Federal Reserve policy makers said they will keep interest rates near zero to ensure the expansion is well grounded.
Euro – European Markets
Despite the official Greek rescue package coming together over the weekend, the Euro fell on Monday and traded at a near one-year low against the Dollar.
Against much opposition in Germany, the German cabinet have approved their contribution of 22.4 billion Euros to the Euro zone and IMF bail out, making them the largest contributor to the total 110 billion Euros. They will be passing legislation to support this later this week and the Greek Government will present its bailout package to Parliament today.
However, investors remain concerned about whether Greece will be able to fulfill its part of the deal in making sever budget cuts. The Greek Government has had to unveil a range of cuts including public sector pay and pensions as well as tax rises. Greek Government workers plan to close hospitals and schools today in protest, and a further private sector strike is planned for tomorrow.
To add to the Euro’s woes, Spain and Portugal are looking ever more unstable and likely to follow in the way of Greece. Spain’s unemployment rate has hit 20% for the first time in nearly 13 years.
Other Currencies – Highlights
The Yen weakened significantly against the Dollar over the weekend as signs of economic recovery gave the US precedence as the safe haven currency.
Australia’s benchmark interest rate has increased for the sixth time since October 2009. However, the Australian Dollar has begun to weaken as the RBA has suggested that interest rates for borrowers are now ‘close to average’.