Daily Currency update for SF members courtesy of Halo Financial

(Catharine Higginson) #1

The Greece situation worsens by the minute after three deaths amidst the melee in Athens and further strikes being called to protest against the harsh spending cuts being forced upon the Greek authorities by their own problems and by the bodies providing loans and financial support. Greece’s position is dire and the repercussions of this one country’s problems are being felt in the other heavily indebted countries around the Mediterranean.

Both Spain and Portugal are in the spotlight and the whole problem is causing traders and investors to vote with their feet. “Run away” is the general sentiment and the Euro is being dumped as they reach the exit door. That is a fantastic opportunity for Euro buyers who are achieving exchange rates not seen since last August. There is a possibility of another cent or so of upward momentum but technically speaking, the rates we saw overnight were at the very top end of the trading range so opportunity is knocking. Today brings an interest rate decision from the European Central Bank but no change is forecast. There is no reason for the ECB to alter its current stance with inflation well within bounds and economic growth no more than tentative, shall we say. However, the press conference after the decision will be very interesting as ECB President, Jean-Claude Trichet is grilled about Greece, Portugal, Spain and the bailout package.

The weakness in the Euro is having a knock on effect elsewhere. The US Dollar is being bought by investors seeking safe havens and, curiously enough, so is the Pound but Sterling has been so weak that it always had the potential to gain some strength. The effects are being felt further afield as well with the Australian Dollar and Canadian Dollars being sold to some degree as risk is seen as a dirty word and security is the new buzzword.

And yesterday was the last day of campaigning for the UK election. It is still a very close battle with no one confidently predicting the result. It does look like the Conservatives will get the largest vote but, because the constituency boundaries are such a lottery, that is unlikely to ensure they get the most seats in Parliament so the spectre of a hung parliament looms large over the day. The House of Commons does not sit again until 18th May to give the parties time to do some haggling over who will work with whom and, assuming no overall majority for any party, that process will be the most interesting of the election because that will set the tone for policy changes in the next year at least.

Overnight news from Australasia was interesting; New Zealand reported a terrific drop in unemployment with the headline level of unemployment hitting 6 percent; the lowest it has been since Q2 2009. That raised expectations of an interest rate hike in June even though the head of the Reserve Bank of New Zealand said he didn’t see a need for change in the near future. The New Zealand Dollar strengthened to its strongest level in 30 years and looks set to make further gains.

In Australia, the trade gap unexpectedly widened to A$ 2.1 billion as increased costs of oil imports weighed and the effects of China’s economic tightening were felt for the first time. Australia also released its retail sales data which only grew by 0.3 percent when most analysts had forecast a much more robust growth rate. The Aussie Dollar was unmoved by the data.

Today is undoubtedly all about the UK election and tonight’s counting and declaration will be one of the most closely watched in many decades. However, there is other news to consider; US weekly jobless claims data may point the way for tomorrow’s crucial monthly employment data and German factory orders data is likely to be roughly in line with last month’s levels but any decline would add weight to the Euro selling pressure. After all, if Germany can’t even grow out of recession then what hope does Greece or Portugal have, or Spain or Ireland for that matter.

It looks set to be a tumultuous day in many respects so get yourself out there, cast your vote and get some coffee on to watch the results as they come in. I love all those swingometers and graphics of parliament with the changes in seating arrangements. It is all stuff and nonsense I know but elections are becoming more like the X Factor every day. I suspect the returning officers will pause for a tense 30 seconds before announcing each result with a drum roll in the background for emphasis, just to build the tension and I would hope we have some confetti cannons set up at each Town Hall which fire when each winner is announced. And perhaps Davina McCall or Ant and Dec should be on hand to cry with the losers. Now that would be an election people would participate in.

What I don’t understand though is that I always thought voting was anonymous but your ballot paper is numbered and that number is recorded in a book so anyone who wanted to know how you voted could do so just by checking that correlation. So it isn’t at all anonymous at all is it?