The Clock Is Ticking For Greece

The Eurozone has delayed its decision on a Greek bailout until further austerity measures are introduced. Whilst there is little doubt a bailout will be granted the delays are not only hurting the economy, there are growing fears of crippling budget cuts being felt by general public. The bottom line is that Greece has stated that they require 12bn euro’s from the existing package by July to avoid defaulting on its debt.

Pound Sterling – UK Markets

Sterling fell over the weekend against the US Dollar as falling stock markets dampened demand for riskier assets as European government officials failed to reach an agreement for a Greek bailout package. However, this has not stopped the pound from gaining against the euro as a report showed that London home sellers increased asking prices by 1.8% from May to June.

US Dollar – US Markets

Although various aspects of the US economy appear to be recovering in a slightly more positive manner, home sales are still down. Purchases of new and existing houses decreased 4.8 percent to the lowest levels seen since last November. Furthermore, with a jobless rate hovering around 9 percent a strong recovery at this point means it would still take years to absorb the 1.8 million distressed properties on the market that are dragging down home values.

Euro – European Markets

As mentioned, European officials are still in heavy talks over how to best approach a Greek bailout package. Greek Prime Minister George Papandreou is faced with the tough task of delivering budget cuts but with his hands very much restricted as is the severity of the debts, the PM is trapped within a metaphorical prison. Even Germany, who was once considered incredibly reliable, failed to muster up any inspirational data this morning. The Producer Price Index figures for May came in at 0 percent. With so many euro sellers in the market we fail to see how the euro can cling onto what it has, let alone make any gains in the market.

Other Currencies – Highlights

Issues in Greece are being felt as far afield as Australia and New Zealand. Both dollars fell against their major counterparts on the back of growing concern Greece will default on its debt. The Aussie is feeling the impact of falling commodity prices as its value fell for the fourth day against the Yen. All of a sudden, the nations export outlook appears incredibly grim. Don’t be surprised to see further losses going forward. China’s ongoing efforts to cool house prices is hurting the market for existing homes, with prices in May falling from the previous month in a large proportion of cities that were measured. The price of new homes however, typically sold by developers rose last month in the majority of cities.