As Summer Arrives Its Doom and Gloom For Greece
1 June, 2015
As we start a new month and head into the third quarter of 2015, the sun maybe shining for most but dark clouds are hanging over Greece once again.
Despite hopes that a deal was on the table, to give Greece the money it requires this Friday, it seems they may still be a little way off. They need to pay 300 million euros come the end of the week but have no money left having scraped together the last repayment. As a further blow to the Greeks, over the weekend some 800 million euros has been withdrawn from struggling Greek banks, sparking fears we could see a continued run on the banks, as worried savers fear the country going bust and losing their money.
The Greeks have been warned they need to thrash out a deal as soon as possible to ensure they get the bailout they so desperately need. The IMF has said the deadline could be pushed back, but only by a matter of weeks, so a deal is still need urgently. With this in mind, despite the euro making some end of week gains, we could start the month with some euro selling as investors speculate over the future of Greece and whether it will be forced to leave the single currency union. They have 7.2 billion euros in bailout funds which has been frozen since last year, but these funds will expire come the end of the month. Greece has to find a way to convince the IMF that it has the reforms in place before then, or a Grexit looks the only outcome.
The pound finished the month with differing results against its major pairings, losing ground by a percent to the euro, the Norwegian Krone and the US dollar. On the flip side, the pound did well against the Swedish Krone and antipodean currencies as sterling ended up against the Aussie and Kiwi dollars. Finally, a near two cent gain against the Loonie helped by some poor GDP figures which showed Canada posting negative growth at 0.6 percent compared to an expected positive 0.3 percent, most likely not helped by the drop in crude oil prices seen over the past months, given how much of a key producer and exported Canada is to its gas guzzling cousins America.
So as the Greeks continue to hope a deal can be sealed what else does the week hold for investors to digest?
Monday – UK, EU and US manufacturing PMI, US inflation
Tuesday – Australian interest rate decision, German unemployment, UK mortgage data, EU inflation
Wednesday – OPEC meeting, Australian GDP, EU, UK and US services PMI, EU retail sales, European Central Bank interest rate decision and policy statement
Thursday – Bank of England interest rate decision, Canadian PMI
Friday – UK consumer inflation expectations, EU GDP, US non farm payrolls and unemployment, Canadian unemployment
A jam packed week for data, with some real key ecostats to contend with along with the Greek talks rumbling along in the background. Plenty to move the markets so expect some volatility as the week rolls on and for anyone looking to send money overseas this week, make sure you contact one of the CI team to discuss the options available and for some friendly guidance to help you make the most of your pound.
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