Markets continue undecided about the financial situation in Greece...
Markets continue undecided about the financial situation in Greece. Fears the country will run out of money come June are running high and the country could potentially exit the euro zone. Additionally, concern looms over the financial stability of Spain’s banks. The region’s government bonds experienced renewed strain on Wednesday as 10 year bonds shot up 0.26% to 6.04%. Ultimately, the euro is feeling the brunt of the unease as valuation dropped below $1.30 against the United States Dollar (USD) during the American trading session late Tuesday. To add to this, Greece could see re-elections as early as next month as the country’s parties are experiencing difficulties coalescing as they work to revise and implement policy.
Alongside this, the Australian dollar dipped as markets reacted to a more austere government stance. Prime Minister Julia Gillard called to a return of a budget surplus to provide the government a financial security buffer as well as give the Reserve Bank of Australia leeway to shift monetary policy and alleviate the pressure of a high valued Aussie dollar off of struggling exporters. The government appears to be shifting responsibility of economic assistance onto the reserve bank and stronger fiscal policy aims to call for an additional rate reduction.
In other news, Britain’s retail sales degraded 3.3% in April 2012 from the year before, according to Business Information Services on Wednesday. The region’s food sales lowered below their level a year ago. Record rainfall last month (April) and colder weather hurt clothing and footwear sales although propped up some smaller household purchases.
EURUSD grabbed the headlines as the pair slumped below 1.3000 for the first time since January 24th. If the current sentiment continues in the markets we are expecting the EURUSD to slide towards1.2700 unless we see some decisive action from the European Central Bank.
Eugene Ross, Analyst
Admiral Markets
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