Greece Final Countdown
It is hard to stray away from the headlines making their way across the Internet and broadsheets today. Greece is in austerity mode and with parliament expected to conclude voting today the markets will undoubtedly react heavily to the results. Ongoing violence in Athens has made the results even more significant and should austerity measures be passed through then rioting is likely to continue.
Pound Sterling – UK Markets
Whilst it was house prices yesterday, today it is mortgage approvals that remained low in May. A report released today is set to show they stayed close to a four month low and as if by magic sterling followed suit. Our currency has hit an 8-week low versus the euro on the back of this coupled with interest rate propositions in the Eurozone. It all seems a bit farcical to be frank – with the heavily documented euro crisis, common sense may suggest that it is the euro that should be struggling and not the pound. However, as we have now stated on many occasions, sterling for the foreseeable future at the very least is a passive vehicle.
US Dollar – US Markets
Whilst the dollar lost ground to the over valued euro, treasury yields rose above 3 percent for the first time in almost a week allowing the greenback to gain as much as 0.5 percent against the yen. The dollar has become far more appealing in recent weeks to international investors who now have increased confidence in its ongoing strength.
Later today the US will reveal two interesting sets of data including pending home sales and crude oil stock changes. If previous data is anything to go by, housing figures are a potential stumbling block for the dollar whilst a heavy deficit in crude oil stocks will look to be erased.
Euro – European Markets
Setting aside Greek austerity news for just one second the single currency has climbed further overnight. It managed to advance as much as 0.3 percent against the US Dollar and has also made gains against sterling. This has arisen on the back of speculation the ECB will raise interest rates next week. Once again, the Eurozone could have thrown the markets a googly with this one in an attempt to distract us all from the ongoing issues facing Greece at present.
Your broker will be on hand today to run through implications of what a yes/no vote will mean to the euro. I too will be putting together a more in depth report later today discussing the results of the voting in Greece, so sit tight; its an exciting day to be involved in FX.
Other Currencies – Highlights
Asian currencies regained some momentum for a second day running on speculation regional policy makers will increase interest rates to ease some of the fierce price pressures in the continent. Governments see the coming months as an important time to reverse accelerating inflation. Whilst levels are not out of control just yet, they are above target and in need of careful tuning.
Further afield, the Australian Dollar has strengthened as speculation Greece will approve the austerity measures being passed by parliament today. This has boosted demand for higher-yielding assets.