Foreign exchange report for June 19By james tweed • Jun 19th, 2012 • Category: Currency
Significant items this week:
Wed 20th June UK – MPC minutes from last meeting, Unemployment
US – FOMC meeting –Interest rates
Thurs 21st June UK – Retail sales, Industrial Orders
EMU – PMI
US – PMI
Friday 22nd June EMU – German business climate/survey
Thank you for downloading the foreign exchange market report from Coracle Online and Crossbar fx for June 19th 2012. (Audio will return next week for this report)
After huge speculation, fear and a little loathing the markets steadied themselves for the weekends Greek election results. The EU prepared Greek exit contingency plans, and Spain hogged the limelight for a while as their bonds hit record highs. These rates are unsustainable and if the past is anything to go by, a bail out is due. This is likely to be for the country this time and not just the banks. As it stands the Greeks have voted in the pro memorandum party – and at the time of recording we are waiting for Mr Samaras to form his coalition. Once that’s done the EU leaders can agree a realistic set of targets and timetable. Mr Hollande’s resounding success in National Assembly elections means he now has the power to tax and spend as he pleases. So we suspect there will be no more Mr Nice guy around the table with Mrs Merkel. The can has been kicked down the road and negotiations will begin, again and the next bailout plan will be revealed.
Elsewhere on the economic front the US retail sales and Industrial production numbers were disappointing. Job creation is slowing and this is leading some followers to convince themselves that QE3 is on the way. F.O.M.C. decides on Wednesday.
In the UK the Jubilee celebrations are all well and truly over and it’s back to work again. Trade and manufacturing figures were worse than expected last week and construction spending is very poor. The Trade Balance figure for April was minus £10 billion which is the worst for 10 months. The Bank of England will make available another £80 billion for the banks if they can show they’re lending it out. This initiative is hoped to kick start the lending to small businesses who will in turn kick start the economy. They seem to have missed the point that fewer businesses want to borrow and incur debt and that consumers aren’t ready to return to the shops.
The G20 leaders are together in Mexico this week, thrashing out plans to get the global economy on track and urging Europe to do everything possible to overcome the European debt crisis, “the single biggest risk to the world economy”. No pressure for them then!!!