Euro starts the week on the back foot

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It seemed as though the markets had a bit of a reality check on Friday and during the weekend as the euphoria following the vote in Athens on austerity measures ebbed away. Greece's parliament stood up against protesters to agree where, when and how the cuts will hit so now it all has to do is sell €50 billion of state assets to fill the gap between Greece's public sector spending and the latest EU bailout. Sound easy?

Well as companies lay off staff to cut their own costs those that remain will undoubtedly be frustrated as their wages are cut and will probably go on strike. Government owned utility company bills won't be paid as their customers are unemployed so the value of the company falls and the Government can't raise the funds required and Greece is back to square one. Understandable then that the markets have reigned back their unnerving support for the Euro last week.

Compared to Friday morning, the Euro is currently trading over half a cent lower against Sterling, the US Dollar and Japanese Yen this morning.

Friday's economic data calendar was largely dominated by manufacturing figures; China reported their weakest manufacturing purchasing managers' index (PMI) of 50.1, the UK reported 51.3 while the Eurozone was at 52.0 and the US topped the list at 55.3. Rather that assisting the US Dollar, the stronger than expected manufacturing PMI actually sent the US Dollar lower. Perhaps the markets viewed what is good for the US economy is good for the global economy but poor for the US Dollar as there is less appetite for the US Dollars' safe-haven status.

Already this morning, the Australian Dollar has fallen against Sterling as Australian building approvals dropped by -14.4% and also reported a -0.6% monthly drop for May retail sales.
Early tomorrow morning the Reserve Bank of Australia is expected to leave interest rates at 4.75%.

Also today is Eurozone investor sentiment (which is likely to fall following the Greek vote) and Eurozone factory gate prices but neither are expected to have any bearing on Thursday's interest rate decision by the European Central Bank.

It is the US Independence day holiday today so the chances are it will be a quiet start to the week.