Demise Of The Euro Inevitable?

Whilst there are still ongoing talks in Greece, billionaire investor George Soros has been expressing his own assessment over the state of the Eurozone. He believes that it is almost inevitable that so called ‘weaker nations’ will be given an exit strategy should they fall by the waist side. He said at a panel discussion in Vienna yesterday that the Eurozone is on the verge of an economic collapse that will start with Greece, but could easily spread.

Pound Sterling – UK Markets

A quiet few days for sterling has not stopped our local currency from steadily losing ground against the euro and US dollar. It appears to be stuck in the middle of a tussle between its two major counterparts who are currently taking turns in being investors’ choice as safe haven currencies. There is no data due out today but tomorrow sees GDP figures released. I’m not filled with optimism at present with any news surrounding sterling but who knows, we could be surprised!

US Dollar – US Markets

The Federal Bank in the US remains the biggest buyer of treasuries even after the second round of quantitative easing ended this week. The central bank has used excessive funds to keep interest rates at record lows. The budget deficit remains a real concern to the government and it something that President Barack Obama and Republicans in Congress are struggling to control. The US Dollar however shows no signs of weakening as investors continue to pour money into safer assets which is hurting Asia’s currencies the most. Whilst this could be a good sign in the short term it is not a true reflection of the US economy and any resurgence in the Eurozone could see the greenback slip very quickly.

Euro – European Markets

There is real pressure mounting in Greece now as fear continues to grow over the possibility that budget cuts will not be approved by parliament. This is a necessity for the floundering nation – without it they will not receive the bailout they are so desperately seeking. This week is crunch time as far as decisions go and Prime Minister George Papandreou’s decision to change his finance ministers may come under intense scrutiny should a bailout not be granted.

Other Currencies – Highlights

The New Zealand Dollar has extended earlier declines after it was revealed the nations trade surplus was lower than expected. Whilst the kiwi has remained strong against sterling, there has been a double-barreled decline against the US Dollar. As mentioned earlier, Asian currencies have continued their decline on the back of the debt crisis in Greece that has drawn investors to safer assets such as the US Dollar. The decline has been led by the South Korean Won and Malaysian Ringgit and looks set to do so for the foreseeable future.