4 May 2010
Hold on tight….its going to be rollercoaster of a week!
After a closer examination of the Greek financials, the €110 billion on the table from the EU and IMF will not be sufficient unless private markets start lending again. In the short term the bailout will mean that Greece will have sufficient cash to repay an €8.5billion that is due in a fortnight, however the suggestion that Greece will be able to raise its own finance by the end of 2011 is optimistic according to bond market specialists.
The first hurdle Greece faces over the coming months is to implement the €30 billion tax rises and budget cuts revealed last week. This has been met with industrial unrest in the capital as government workers shut down schools and hospitals and disrupt flights in response to the austerity measures.
The Euro itself did not respond well to the bailout news yesterday falling more than 1% against the green back to $1.3184 as fears that the fiscal cuts required will be too much for the debt stricken country to bear.
Over to the UK and the Conservatives are maintaining their efforts to win a majority in Thursday’s election. Sterling has been largely unaffected so far although the forecasts for the Pound could be turbulent ahead of the election on swings in voter sentiment but for a bounce in the currency’s fortunes once the result is known …. either Friday or in the case of a close call, early next week. Below is a summary of UK data released earlier today:-
UK PMI data out this morning has come in at 58.0, up from revised 57.3 in March, and better than median forecast of 57.4. Highest read since September 1994.
Elsewhere, March mortgage approvals 48,901 vs 46,882 in February, in line with median forecast 49,000.
Mortgage lending 0.318 bln, down from 1.848 bln in February, and some way short of median forecast of 1.6 bln. Lowest since July 2009.
Consumer credit 0.325 bln, down from 0.578 bln in February, and slightly below median forecast of 0.4 bln. Lowest since December 2009.
Final March M4 money supply +0.2% m/m, +3.6% y/y.
Down under and the RBA raised interest rates again, by 1/4pts to 4.5% with the Dollar maintaining its recent strong showing and the Chinese authorities raised their banks’ Reserve Ratio by 50 basis points to 17% to try and curb domestic lending.
In terms of the rest of the week we have a busy Thursday with the European Central Banks Interest Rate decision, Ben Bernanke’s speech in the US and the UK general election. Friday could possibly see an election result, in addition to a Canadian and US job number, so everyone hold on tight on the rollercoaster week ahead!
Report by Philip Ryan
Currency Market Updates by Tom Nadir
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