Yesterday Greek Prime Minister Alexis Tsipras agreed terms with Eurozone ministers for a third bailout of €82-86bn. The reforms include simplifying and making cuts to pensions, increasing VAT, making the job market more transparent, privatising the electricity network and extending shop opening hours. However Greece are not in the clear.
Mr Tsipras has returned to Athens and is now in talks with Finance Minister Euclid Tsakolotas and other party officials. Mr Tsipras must convince party officials to sign off four pieces of legislation, which the Greek people voted against in the referendum on July the 6th. There has already been resistance from Defence Minister Panos Kammenos who has indicated he will not agree to the terms Mr Tsipras has proposed. In addition it appears the Greek people are unhappy with the Syriza party as demonstrations have begun outside Greek parliament and numerous unions have threatened to strike.
For clients buying or selling Euros short term (next 30 days) today is the day to make big decisions. I’m a strong believer that the Greek government will sign off the four pieces of legislation and therefore Greece will not ‘Grexit’ the Eurozone. Therefore I expect GBP/EUR exchange rates to drop to the 1.36s.
If my predictions materialise clients looking to purchase €200,000 could pay an extra £4,000. Therefore if I were buying Euros I would purchase today. Where as clients looking to trade €200,000 to sterling, waiting for a deal to be struck may be wise.
To take advantage of a specific economic event it is important to keep in touch with your account manager. Call direct to our dealing floor on 01494 725353 or email me at firstname.lastname@example.org to keep up to speed with the latest market movements.
It’s a busy week for the Greenback. Tomorrow retail sales figures are released at 12.30. The US had a poor start to the year due to poor weather conditions. However now the weather has appeared to have passed, I wouldn’t be surprised to see this figure come in higher than expected (0.3%).
Chairwoman for the FED Janet Yellen is publicly speaking Wednesday and Thursday at 2pm, regarding the current economic situation and the policies in place to improve it. I expect both speeches to be similar however after Thursday’s testimony a Q&A session follows. This normally causes additional volatility throughout the currency markets. Furthermore last Friday Yellen indicated that the US is likely to raise the interest rate this year. If she indicates this further in Wednesday or Thursdays speech I expect the USD to make gains against all major currencies. Consumer Price Index figures (inflation) finishes the week for the dollar. If there is any improvement of 0% this could be another step towards a rate hike for the US. However I think inflation will stay at 0% and the data will be a non-event.
If you are looking to buy US dollars this week I would trade as soon as possible but definitely before Janet Yellen Speech on Thursday. I think she is going to be bullish about the dollar and expect GBP/USD could drop back towards 1.52s. For more information feel free to call 01494 725 353 or alternatively activate a free currency trading account here.
Last week Canada’s building permits dropped 14.5%. This implies that Canada is in desperate need for investment. One way to get investors spending would be to cut the interest rate on Wednesday. I don’t expect rates to be cut however if the bank of Canada give any indication that a cut is on the horizon we could see rates spike through 2.
Friday at 12.30 CPI data finishes the week for the Loonie. Inflation has been like a yoyo over the last 6 months due to rises and falls with oil prices. The consensus is for 0.3%, however I wouldn’t be surprised to see a figure around 0% and therefore I predict the Loonie to finish in the 2s by the end of trading on Friday.
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