Despite The Protests The Euro Marches On
Despite The Protests The Euro Marches On.
As if there was any doubt….Greek parliament successfully pushed through harsh austerity measures in parliament yesterday. The Greek government amongst heavy rioting and numerous planned reactive strikes came to the decision that these harsh national cuts greatly outweighed their only other option, defaulting on their loans.
The market has been spurred on by this vote and has lead to some large movements over the last 24 hours. Unfortunately most of these movements have been at the cost of the pound!
Pound Sterling – UK Markets
The pound has fallen to a 15 month low against the euro this morning. Consumer confidence fell to - 25 from - 21 in the previous month, with little change to house prices there is limited scope for interest rate increases from the Bank of England. GBP-EUR fell 0.7% and at the time of writing this article it is continuing its decline. This decline was confounded when futures markets short sold sterling on the assumption that interest rates would again be held in the UK seeing a potential widening in interest rate differentials amongst many pairings, especially GBP-EUR.
Since yesterday Sterling weakened against all of its major trading pairs. The pound has fallen 9% in the last 12 months against the euro, second only to the US Dollar in the worse performing developed-market currency’s list.
US Dollar – US Markets
With some key data released tomorrow, the market awaits the announcements as a measure of how the US economy is performing.
President Barack Obama is trying to reach a compromise with the opposing Republican lawmakers, who are seeking hard-hitting spending cuts before they will allow a rise in the nation’s borrowing limit. With the cap currently at $14.3 trillion this may be a tough sell for the Democrat President.
Euro – European Markets
It is a great day for the single currency, purely and simply, a great day.
After the immediate threat of a Greek default was quashed after the austerity vote was successfully past, the euro has been firing on all cylinders.
Euro climbs to a three-week high against the US Dollar on prospects that the European Central Bank will increase interest rates next week.
If you are considering selling euro now, or at some point in the next year, now would be the ideal time to speak to you broker about your options. The 15 month high against sterling may be a temptation to attractive to turn down.
Other Currencies – Highlights
The Aussie Dollar rose to a two-week high against the greenback on the assumption that the Australian Central Bank will release data showing that lending sufficiently expanded last month.
The New Zealand Dollar also followed suit, gaining strength due to the positive Greek austerity vote. Investors are moving to riskier assets, causing the dollar to appreciate against 15 of its 16 major counterparts.