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Global Exchange

Exchange Rates for Saturday 4th July 2015

Greece PM Samaras to seek further EU funding on top of the €31.5 billion already in the pipeline

Question: Why on earth would a country remain part of a currency union that it has been unsuited since day one? Answer: Because the alternative is even worse.

Perhaps, but the Euro-loyalist politicians of Athens persist with the notion that their country can cut its way out of recession and Prime Minister Saramas will this week petition EU leaders for another €20 billion of funding, together with more generous repayment terms. Of course, let's write another cheque to a country already up to its neck in debt, with nearly a quarter of the workforce on benefits and an economy -6.2% smaller than it was a year ago. And pay it back when you can!

Will Germany and Finland agree to such a loan, on the basis that a small extra contribution would postpone the day of reckoning? Or will the hardliners lean the other way and deny Greece the €31.5 billion which is already in the pipeline and is needed next month to pay the electricity bill?

The indecision is hardly reassuring and means that among currency traders and investors the indecision spreads. With no inspiration from the data on Monday the currency markets decided that the most sensible course of action was to do nothing. 

Sterling fell by 40 ticks against the Australian Dollar on expectations that Australian interest rates will remain at 3.5%. Apart that, Sterling was unmoved.

Today is going to be no more inspiring either. The UK reports on July's public sector borrowing and the CBI publishes industrial orders for August. From Canada we have wholesale sales figure for June. 

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Conceived with Ambition