Easy Financing

• Greece is the word …it’s the word…it’s the word

• Sterling slips on housing data

After a day of train delays and hassle in the UK, it was with joy and elation and certainly no envy at all that I read about China successfully running the first test of their new bullet train which will travel over 1,318 km (817 miles) in four and a half hours. It took me half that time to travel from East Sussex to London yesterday and the same time to get home again; a round trip of less than 100 miles. So I managed roughly 22 miles per hour and the Chinese train runs at 190mph. You know, after careful on consideration, I think double inflation fare increases every year are perfectly justifiable Mr Southern Rail. Honest.

EU commissioners could do with a bullet train between Brussels and Athens at the moment, (they could put it on expenses so it would be easy for them) such is the shuttle diplomacy necessary to get the Greek Parliament to pass the package of austerity measures the EU has demanded and the Greek Prime Minister has agreed to. The rumour mill is rife with speculation as to the outcome of the vote which is expected on the 30th June. Will the opposition parties be brave enough to risk a Greek financial meltdown in order to score political points against Prime Minister Papandreou? Will they be happy to demand some changes to the clauses or will they make greater demands? Will an agreement and the payment of some more cash to Greece be enough or is this just postponement of an inevitable exit from the Eurozone for Greece. It is all being bandied about and no one has a definitive answer but the markets appear to think the outcome will be positive because the Euro is stronger this morning. We get German inflation and consumer confidence data today as well as a bunch of speeches from ECB members but all eyes are on the Greek parliament. The French banks’ plan to allow Greece to roll its debt over without default is gathering fans and that may be the way forward but we have to wonder whether this is just delaying the inevitable.

Strength in the Euro is to the detriment of the Pound and US Dollar. Sterling was hampered by poor housing market data yesterday and by Adam Posen, a voting member of the Bank of England’s Monetary Policy Committee who said the Bank of International Settlements was wrong to call for higher UK interest rates. Mr Posen likened Britain’s current predicament to that of the 1930s when the UK was previously recovering from a devastating recession. He continues to press for low interest rates and perhaps even an expansion of the level of cash being pumped into the financial market to keep the wheels turning.

The US Dollar is being pulled from pillar to post by events elsewhere. Commodity prices have stabilised a little and oil is dropping so that is positive for the US Dollar but investors are still running scared from events elsewhere so the US Dollar is still being bought as a safe haven currency. Share prices rose yesterday and the US Dollar weakened for the day but all of this is within recent trading ranges so we are not plotting a path of any distinction; just moving sideways within current parameters. This afternoon brings inflation related data and a consumer confidence index so there will be reasons for volatility in the hours ahead. However, the Greece situation will have an impact of investor sentiment so don’t rule out some significant swings in the USD’s value over the next couple of days.

News that the rebuild in Christchurch may be delayed has dampened expectations of growth in New Zealand and that is weighing in the New Zealand Dollar. This has to be seen in context though. We are still within a few cents of the strongest ever level in the value of the Kiwi Dollar and there is little chance of the interest rate demand for NZ Dollars declining when all around (other than the Australian Dollar) offer far less yield. So there is every chance we will see another bout of Kiwi Dollar strength in the weeks ahead so those who need to buy NZ Dollars may want to bite the bullet sooner rather than later.

And the Aussie Dollar is a tad weaker as traders try to determine whether there will be calls for interest rate cuts as and when China’s economy starts to slow. The bond markets are pricing in roughly 25 basis points of cuts over the next year and the Australian Dollar has reacted to that.

This afternoon brings Canadian inflation data. Anything below 3.3% on an annualised basis could weaken the Canadian Dollar whereas anything on the upside will boost the CAD.

And finally, we heard yesterday that new teachers are to be taught to manage disruptive pupils in the classroom. Training in the applicable laws, restraint techniques, managing low level bullying and how to deal with in class disruption are all on the agenda and that is great but; the quetion this poses is, why was none of this taught in the past. Surely we have had hundreds of years of experience with disruptive pupils and throwing board rubbers at them or clipping them round the ear was banned ages ago so it is no wonder schools are in crisis if none of the teachers has had the training to deal with ‘trouble makers’ as we used to call them. That’s probably a banned phrase now.

Similar Posts:

• AUD enjoyed a strong week across the board
• Euro jumps on hope for new Greek aid package
• In Greece, Rejecting Austerity Could Mean More Austerity
• Summer Soft Patch?
• Trading Week Outlook: Jun. 27 – Jul. 1