Celebrations Across The Pond….For Some At Least.

We would like to wish our American cousins a very happy Independence Day and hope that the celebrations help lift the mood of the nation, akin to our Royal Wedding earlier in the year. However, not all will be flipping burgers and letting off fireworks as debt crisis talks have lead to the usual July 4th recess of congress being cancelled as the resolution deadline grows ever closer.

Pound Sterling – UK Markets

With a month of poor retail, housing and manufacturing data it is a light relief to see some favourable employment figures from The Reed Job Index. The Reed Index tracks the number of new job opportunities and the salaries on offer compared to the previous month. The index rose to 125 from 121 in May and this has been attributed to increased hiring in insurance and engineering sectors. Although welcome news, as an unofficial indication of employment creation, it has had little positive affect on the strength of the pound.

US Dollar – US Markets

As discussed in Friday’s news the key topic in America is still the increase in the US debt ceiling. Republican Senator John Cornyn has hinted that a “mini” deal could be on the cards if this is all that could be agreed. The Republicans in congress would prefer a long-term settlement; however, time is running out to get a deal struck before August 2nd when many believe the US will fail to meet their debt obligations. Republicans are opposed to increased tax rates as they feel, in this very fragile economic recovery, higher taxes may discourage employers from hiring new staff. They favour spending cuts in most federal departments, other than defence, to help reduce the crippling national debt. This stance may hinder any longer term deal being made with President Obama as his Democratic views seem to differ greatly.

Euro – European Markets

The euro might have won the current battle with Greece, but the War rages on. It has fallen against the Yen on debt rating speculation for Greece. Standards & Poor, a US based financial research and analysis organisation, have suggested that a debt-rollover plan for Greece may prompt a “selective default” rating for the country. These comments lead to sentiment for the single currency being undermined this morning. As of yet, markets are reluctant to aggressively sell euro purely on the views of one agency and so little other movements have been seen. If, however, other rating organisations follow suit with downgraded opinions of Greece’s and other European country’s ability to repay debt, then perhaps the single currency may look a little more vulnerable than it has in recent weeks.

Other Currencies – Highlights

June saw the Thai Baht’s best performing month since February 2008 and shares followed suit on news of an election victory by allies of exiled former premier Thaksin Shinawatra. This victory has raised prospects of foreign investors returning to the South East Asian country. The Baht climbed 1.1% against the dollar reaching 30.48. The Australian Dollar has fallen from its seven week high against the US Dollar on the news of poor retail figures. These below par retail figures have shown weak spots in the Australian economy and will perhaps delay any interest rate rises from the RBA.