Greek bailout agreement reached

The week started yesterday with little data out to surprise the markets. The only move of note, was the Pound managing to push back against the Euro and the Dollar and recover some of its losses from the end of last week, when the Bank of England pushed back interest rate rise expectations to mid next year.

The big news in the last 24 hours has come with the Greeks and Europeans agreeing all the main points on a brand new €86bn third bailout, which will secure the Greek’s position in the Eurozone and avoid them falling into bankruptcy. There are some small points still to tie up and the whole agreement needs to be put to the Greek parliament for ratification, but with a deal required by August the 20^th, it seems the negotiators are avoiding the last minute rush this time. This could be the news that the Euro has been waiting for, and for those of you with a Euro purchase coming up it may be worth looking to secure your currency before the final points are agreed – securing Greece’s position in the Euro, and removing the fear of exit and contagion have been predicted to cause multi-cent recovery for the Euro…

The day ahead is a relatively quiet one, with not much in the way of data due out. There is a complete absence of UK data, although we have already seen British Retail Consortium figures show a slight improvement in the value of last month’s retail sales. The only other big news is likely to come from the German and overall European ZEW economic sentiment surveys due out this morning. Positive readings could start the Euro down the road to recovery.

In other news, over night the Peoples Bank of China devalued the Yuan by 1.9% in what is being called a ‘one off realignment’. While the Yuan is not a very easy currency to work with outside of China itself, this move caused a significant spike in US Dollar strength. The PBoC have made this move in an effort to stimulate what has been a worryingly slowing economy in China in recent months, including the massive losses on their stock market in the last few weeks. The only real effect for those of you with Euro or other more mainstream purchases are likely to come as knock on effects via the Dollar, but it is still a situation worth watching closely.

As ever stay in close contact with your CI account manager to be kept informed of exactly what is happening and what impacts are anticipated for your upcoming currency requirement, and if you do have a Euro purchase to make soon it is well worth considering a forward contract to take advantage of high rates before the Greek bailout hits the market.