Greece: The Waiting Game
Greece: The Waiting Game
As D-Day approaches in Greece there has been mass protests and 48 hour strikes held by unions as parliament prepares for a key vote on tough austerity measures tomorrow. Whilst a bailout is necessary to avoid a default, you can understand the public’s anger. Should the supposed austerity measures be passed then they will be the hardest hit, with job cuts and tough increases in tax high on the agenda.
Pound Sterling – UK Markets
Sterling continued its fall across the board yesterday as a Bank of England official revealed that there is “little risk of inflation” in the UK economy. This has only helped fuel existing speculation that interest rates may stay at record lows for some time. We didn’t need this pointing out to us, but just in case there was any thoughts that interest rates may rise, policy maker Adam Posen considered any such thoughts as complete “nonsense”. Chew on that sterling!
Further evidence that the UK economic recovery may be stalling is backed up by a report showing house prices fell for a second month in June. The average house price across the UK fell 0.1 percent in June from May. Our currency managed to drop even further against all but 1 of its 16 major counterparts which has caused investors to state that they are still in “sterling selling mode”. It is also disappointing to see that previous expectations of sterling rising against the US Dollar have now been wiped out.
US Dollar – US Markets
As previously stated, an ever present hurdle in the US economic recovery is lacklustre housing figures. Following on from last month, it is expected that data will show that home prices probably decreased again in April. A valuation of properties in 20 US cities revealed that there was a drop of 4 percent from April last year, the biggest year-on-year drop since November 2009. Furthermore, there is no indication that things will improve with experts predicting that further falls may occur.
However, on the flip side of this, consumer confidence rose to 61 from May’s figures of 60.8. This could be largely to do with the drop in fuel prices. Compared with May, when the cost of fuel per gallon rose as high as $3.99, on June 26th the average price per gallon across the US sat at $3.57. So, whilst there is plenty for the US government to consider, the scales are finely balanced at present.
Euro – European Markets
There has been a complete 180 degree u-turn on issues surrounding Greece. It is now expected that parliament will roll over and agree to budget cuts being suggested by Prime Minister George Papandreuo. This news reflects in the exchange rates as the euro advanced against 11 of its 16 most traded counterparts.
Germany also welcomed proposals from French lenders on voluntary participation in the debt plan. However, they are not yet out of the woods. Tomorrow, Greek lawmakers will vote on budget cuts and if we’re being totally honest there is no way of knowing the real thoughts of what is going through parliament at present.
Other Currencies – Highlights
A recent poll in Canada has shown that the country’s economic confidence is severely low. The proportion of Canadians predicting a weaker economy in the next six months has risen by 23.6 percent. Although the local economy is still relatively strong, concerns of Europe’s sovereign debt crisis has meant people are instinctively spending less in every corner of the globe.
The opposition party in Thailand will ‘seek to keep the country’s currency competitive’ in a lead up to the coming election. After a 4.6 percent rise against the US dollar in the previous year, making exporting more expensive, they have committed to continuing the falling trend of this year, which saw the percentage reduced to 3.1.