We begin this week much the same as where we left the last. Markets are continuing to plummet as concern continues to grow over a potential Greek default. The euro has finally suffered despite the fact these worries have been present in the market for quite some time now. In fact, the single currency fell to its lowest level versus the Japanese Yen since June 2001. It appears the only question left in the markets is how and when Greece will default – orderly or chaotic?
Pound Sterling – UK Markets
Fears over the global economic recovery are well and truly hitting home. It is believed that only London and three other English regions recorded growth in August, with other areas either in stagnation or going backwards. The latest PMI reading showed a decline to 50.6, down from 54.4 in July. Scores of 50 indicate economic stagnation whilst anything above this indicates growth. However, with a sharp decline being recorded it is evident which way our economy is moving.
Sterling has just taken a dip this morning in the wake of this news. However, further indication of present and future movements will be consumer confidence figures due to be released tomorrow.
US Dollar – US Markets
Despite US Dollar strength, our friends from across the pond have not been able to avoid the stock market downturn. US stock futures fell, indicating that the Standard and Poor’s 500 index will extend last week’s loss. This is purely down to the pressure building up in the eurozone over a possible Greek default.
Tomorrow’s monthly budget statement is not likely to reflect so well on the US so at some point the dollar could retrace its recent gains. However, as with everything in these markets there are no certainties, just a huge amount of maybe’s.
Euro – European Markets
As if the European Central Bank did not have enough on their plates, over the weekend chief economist Juergen Stark resigned amid speculation of conflicts within the ECB over its bond-buying programme. However, the ECB has stated that Stark is leaving the job for “personal reasons”. Ironically, this comment is in ‘stark’ contrast to what the German claims to be the reasons. Unfortunately the timing couldn’t have been worse with European markets crashing overnight. Trichet certainly has plenty on his plate to deal with before he departs his position in November.
Other Currencies – Highlights
The South African Rand fell to its lowest level against the dollar in more than a month as investors ran scared of riskier, emerging market assets amid concern Greece will default on its debt.
This was also the case for the Australian dollar which dropped to its lowest level in three weeks against its US counterpart. Neighbouring New Zealand also saw its currency decline as the eurozone debt crisis shows its affects everywhere.
Dollar Weakens as Fed Turns Dovish, Eyes on BoE
Euro Plummets as Draghi Opens Door For Rate Cuts
British Pound Stays Under Pressure Ahead of Tuesday's Vote