Can The ECP Continue To GREECE The Wheels Of Europe?

With the fear that Germany is tiring of bailing out its Euro partners the ECB has warned that any failing to meet terms of their emergency bail-out plans are at risk of losing promised funding. This comes hotly after reports from an ECB Economist who conceded Greece will more than likely be unable to meet their obligations, thus branding the indebted nation insolvent. Whilst it’s not impossible for Greece to meet their obligations it is considered unlikely at this point. With the ECB refusing to maintain loans to the countries banks, could this see a swift exit by Greece from the Euro? Pound Sterling It is a relatively quiet day for sterling news however, the pound has managed to sustain some of its earlier gains against a number of other pairings. Riding high on earlier news that inflation expectations for the ‘year to come’ were slightly up in May after its unexpected fall in April saw GBP-EUR reach a mid market rate of just shy of 1.16. Sentiment towards the UK recovery is still that of an unsteady one and we saw GBP drop slightly again this morning. Average housing price data released this morning came in better than expected at 0.3 percent against the planned 0.1 percent which is a good indication of positive movements in the UK housing market. US Dollar The dollar has continued to lose ground against both the euro and sterling. Negative US growth figures saw the dollar fall against the GBP to a mid market rate of 0.609. The first quarter growth figures show the US economy only grew 1.8 percent in the first three months. This caused havoc with the dollar as the consensus had originally been placed at 2.2 percent for the quarter. Today sees a lot of information out on the dollar including the release of personal consumption expenditure figures. This data is used to measure inflation by the Federal Reserve and indicates if consumers are switching to more economically alternative goods. Personal income data combined with housing data could result in some interesting dollar movements. Euro German CPI figures out today are not expected to change significantly from the previous announcement, indicating little or no change in the average price for goods within the euro power house. Consumer confidence in the whole euro zone today is again predicted to be lower than the previous month. If this trend continues it will surely mean the negativity surrounding the currency will continue to grow. Other currency Highlights The first increase in over two years in Consumer Price Index has yet to be heralded as a significant victory by Japanese policy makers. A prominent BoJ Executive suggested that rapid growth within emerging economies will lead to rising global food costs, as producers try to keep up with the increase in demand. The GBP/JPY hit 133 midmarket yesterday but failed to break above the expected 134. Japan’s Prime Minister is under mounting pressure from his opposition to take responsibility for the way he has handled the ‘worst nuclear crisis in 25 years’. It is believed a ‘vote of no confidence’ against the government is imminent. With lawmakers and opposition leaders’ calling for him to resign amid reports he has failed to convince his own party that a tax hike is the answer to the rebuilding of the damaged economy…..the market’s await the result.