Cameron Delivers Knockout Blow
Cameron Delivers Knockout Blow
David Cameron has delivered a boost of confidence into the UK economy after winning the fight to limit the amount of aid we will give to Greece. Whilst it was first thought the EU wide funds would be used to give to the struggling nation Cameron has ensured that this will not be the case and the only contribution the UK will make will be through the International Monetary Fund. This has come as welcome relief to the average UK tax payer.
Pound Sterling – UK Markets
Stocks rose after the EU pledged support for a Greece bailout package and for the second consecutive day sterling traded below 1.60 against the US Dollar. In fact, yesterday sterling fell to its lowest level versus the dollar since March 28th of this year. There was little change versus the euro after a highly volatile day yesterday.
Later this morning Bank of England Governor Mervyn King will deliver a speech in which he will explain the forecast for the short term UK economic outlook. Whilst there are no direct figures related to this, a positive outlook will be seen as bullish, but on the other hand should our dear Mervyn drop a few negative bombs (as he so often does) then we may see sterling fall further.
US Dollar – US Markets
The US is set for a busy day today as come GMT 13:30 there will be a raft of data that is due out. These figures could enforce the recent rally, especially against sterling should data come in positive or as expected. Also, as commonly the case, Friday afternoons can be a very interesting period on the foreign exchange markets where high volatility is to be expected. Keep an eye out and perhaps speak to your broker beforehand to get a view before data is actually released.
Euro – European Markets
I apologise in advance for rattling on about Greece for the nth consecutive day but the bottom line is not only is it dictating markets across Europe, it is also spanning far beyond that to Asia, the US and beyond. However, the good news is that the summit taking place in Brussels is set to conclude today which may shed some light on the overall picture. The EU in the meantime has backed a bailout package so long as Greek Prime Minister George Papandreou is able to push a medley of budget cuts through parliament next week.
The direct effect on the euro itself has caused the single currency to fall for the third consecutive week against the US Dollar. The shared currency fell against a basket of its major peers this week before a report later today is expected to show a drop in business confidence in Germany, the continents largest economy.
Other Currencies – Highlights
The Australian Dollar has rebounded from a one month low against the US Dollar on growing optimism Greece will pass budget cuts next week that they need in order to receive the bailout package. The currency down under advanced against 16 major counterparts after European leaders urged Greece to implement cuts so they can help the struggling nation sooner rather than later.
However, a fellow commodity currency, the Canadian Dollar fell against its US counterpart as crude oil and global equities dropped on growing speculation the global economic recovery may falter which would consequently dampen the demand for higher yielding assets. The loonie depreciated 0.9 percent over the course of the week following this data.