- Greece on the verge of being ejected
- Hourly earnings increase in UK
- Commodities push Aussie dollar lower
- CAD awaits inflation and retail sales
The situation in Greece has reached new heights. Yesterday, Prime Minister Alexis Tsipras told his parliament that the IMF has “criminal responsibility” for Greece’s debt crisis. The claim agitated markets, dropping most European indexes by 0.50%. However, the Athens market fell by 4.77% and Greek two-year bonds reached a staggering 28.5%, depicting the severity of discord between Greece and its creditors. To put this in layman’s terms, the Greek government is willing to pay 28.5% in interest to any investor that wants to hold a two-year Greek bond. Talk about being desperate for cash.
Given the circumstances, the departure of Greece from the euro zone, also known as ‘Grexit’, is looming ever more in the horizon. Decisions made tomorrow at the Eurogroup meeting will be critical. Follow us on Twitter to keep up with these developments as they unfold.
Elsewhere, Sterling saw gains against most currencies on strong Average Earnings report that showed an increase on average hourly earnings by 2.7% year-on-year vs 2.1% expected. Earlier today, the Bank of England Monetary Policy Committee minutes showed interest rates will stay unchanged for the month of June. As mentioned yesterday, we expect to see rates unmoved until inflation reaches BOE’s targeted levels of 2%.
The Canadian dollar remains unchanged this session. No big economic indicators will be released until Friday. So the loonie will stay vulnerable to turbulence arising from the Federal Reserve’s Monetary Policy Statement released later today. All important inflation and retail sales reports are due on Friday morning – stay tuned.
The Australian dollar is lower this morning on near all-time-low commodity prices and iron ore. The dependency of the Australian economy on commodity prices make it very susceptible to any volatility coming from abroad, especially from China and its slowing economy.