CyprusLiving

We thought you might be interested in some insightful market commentary but didn't know if it should be long and detailed or short and to the point. So we did both, please let us know what you'd like to see!

The detail (courtesy of Director Sean Barrett).

The Euro zone crisis rolls on with the Greeks Prime Minister George Papandreou making a shock announcement for a referendum on the bailout deal struck last week. While Europe may not be having a great time of it economically the same cannot be said for its horse racing. I watched as three European horses took first second and third at the Melbourne Cup in Australia, or “the race that stops a nation” as it is often called. France, the UK and Germany took the honours in Australia’s biggest horse race. This of course won’t be any comfort to EU leaders who are no doubt baffled by Greece’s decision given recent polls show overwhelming negativity to the bailout deal.

EUR/GBP which rallied on the back of the announcements last week has taken a major dive early yesterday and today, trading at under 0.86 from a high last week of over 0.88 pence. I expect the pair to settle a bit and will await the UK GDP numbers due out today, forecast at a growth of 0.4% YoY, for further direction. EUR/USD also continues its decline to sub 1.38 as the Euro debt crisis continues. The initial rally after the summit has failed to follow through as most believe the EU leaders haven’t done nearly enough to tackle growth or competitiveness issues in the medium/long term. The Greeks have certainly caused more headaches today. It will be a tough road for Europe and EUR/USD.

The markets also have to sift through the rubble of MF Global, the 7th largest bankruptcy in US history. It will take some time to work out who and by how much other institutions are affected. Obviously it will have nowhere near the affect of Lehman Brothers but there will be some ripples that will do investor confidence no favours.

In other markets, while not watching the horse racing the RBA cut interest rates by 0.25% citing slowing Chinese growth and the continuing problems in Europe along with the easing in inflation for the reason for the cut. USD/JPY retraced a bit at around 78 level after the BOJ’s intervention early yesterday morning. It remains to be seen if they have the firepower to keep it at the levels they are looking for.

Other important numbers out today; German Unemployment, Fed rate decision form the US (no change expected) and the UK GDP figures of course.

Oh and Barlays Bank have announced quarterly profit rose 5% due to gains in retail banking…. Retail FX and transfer charges probably!!

Sean Barrett
CurrencyFair
Disclaimer – the content of these posts are the views of CurrencyFair and cannot be considered financial advice. They are made without taking into account individual objectives, financial situations or requirements.

The short version.

The Euro. Bad. Again. But good for you? Could be, if you're moving money from the UK to Cyprus. We could really do without this Greek referendum. Should settle a bit against Sterling when UK GDP numbers come out later today. Expected to continue its decline against the Dollar.

MF Global, the 7th largest bankruptcy in US history. More badness, we’ll have to wait for the ramifications.

Stuff happened in other markets but you’re probably not interested in that. If you are, let me know and I’ll recommend a good shrink.

I fully endorse Sean’s comments on Barclays Bank’s rise in profits.

Jonathan Potter

Disclaimer – the content of these posts are the views of CurrencyFair and cannot be considered financial advice. Take care out there, it’s choppy.

Hi Sean.
You asked for comments upon whether we like the long or the short version....
Although usually put off by long postings / letters, I preferred the long one to the short one.

If other people here in Cyprus are like me then they are of course worried what will happen to the exchange rate between the Euro and the GB£.

One thing for sure is that we, (the man in the street) can do very little about it at all.

Thanks. Trev..

Thanks for the feedback Trevor. Current best rate on http://www.currencyfair.com for GBP/EUR is 1.1637 so it's going in the right direction for you and your fellow expats...

That's certainly going in the right direction.

Regards. Trev..

Like both.

Thanks Tia, we will try and keep you both informed and entertained!! Jonathan doesnt quite get all the market goings on, so has to play the funny guy!

CurrencyFair - Sean wrote:Thanks Tia, we will try and keep you both informed and entertained!! Jonathan doesnt quite all the market goings on, so has to play the funny guy!

Although I do manage to get all my words in so that my sentences make sense!

Thanks Jon, I have edited my earler post!

Just a short update today, as quite frankly I’m not sure what way things are going to go. All eyes, ears and everything else are focused on Greece at the moment. To say they have tipped the apple cart would be a gross understatement. Thoughts have now well and truly turned to what will a Euro zone without Greece look like. It is impossible to say how this will take place or what the fall out for the rest of the countries will be.

They have plenty of opportunity to talk about it at the G20 meeting, the Euro Zone Economic and Finance Ministers meeting and the EU – Economic and Finance ministers meetings all coming up over the next few days. Exciting stuff! How about “a little less conversation a little more action please” as the song from some soccer world cup went.

EUR/GBP currently around the 0.86 mark, pretty much the same level as my last commentary. ECB rate decision out later today with no change expected.

There are definitely a few interesting days in store!

Sean

The timing may not have been certain but there was no doubt there was going to be a change of captaincy in Italy and Greece. The “flamboyant” (for want of a better word) Berlusconi has finally stepped down, though he had little choice. Italians had finally had enough as they hurled abuse and coins at his car after delivering his resignation. His resignation reportedly inspired street parties across Italy… he wasn’t very happy about it! In Greece, Papandreou departs after the bizarre decision to call a referendum on the bail out. No real surprise there either.

So what now for Europe? Despite the changes at the top, bad news is bad news, no matter who the messenger. Mario Monti and Lucas Papademos have a tough road ahead. The ECB has made it clear that it is the reasonability of the member of the union to sort out their own backyards. That means the new leaders still have to deliver some pretty serious austerity measures to bring their economies back under control.

Markets will again move to the risk side as the resignations will be seen as a move (however slight) in the right direction, hopefully putting a line under past policy and focusing on a way to get things back on track. Though that may be short lived. EUR/USD recovered of its lows on Friday of 1.3480 back over 1.37. EUR/GBP trades around 0.8575 having bounced on the news from Italy and Greece the range of 0.85-0.88 is still intact with little on the data front today to give much direction.

Apologies for my absence, hopefully I'll be much more regular with market updates in 2012.

I saw today that Fred Goodwin was stripped of his knighthood for his part in the collapse of RBS that forced the UK government to fork out 45billion pounds to keep it afloat. I can’t see him being too bothered given his attitude over his massive taxpayer funded pension he wouldn’t be separated from.

In the markets Greece is still the focus (which really hasnt changed since my last post in Nov!) with the all important private-sector-involvement (PSI) still no nearer agreement with time running out before a chaotic default occurs. The EUR sold off against GBP to be back below 0.82. Not surprisingly, we are seeing good buying of EUR with the current best available rate for GBP above 1.20.

EUR/USD currently at 1.3035 should see a selloff today with European woes bringing risk aversion firmly back into play.

*CurrencyFair does not provide Financial advice, as any comments in now way take into account your personal financial situation. Commentary is provided for general information purposes only.

Sean, many thanks for your market update. It is also good news that you will do your best to keep us all up to date.

Can this really be a coincidence that there is a spare knighthood floating about.

Regards. Trev..

Thanks Trev, your support is always appreciated!

Not much expected to move about today ahead of the US non farm payrolls. As a younger man I remember sitting on the dealing desk waiting for this number to come out. You would have in your mind what you think it should be, careful analysis tells you where the markets should move.... the number comes out, you try and digest its meaning before everyone else... you never do, revisions come out, re-evaluate, re-calculate after big moves up and down EUR/USD ends up about the same as where it started. I gave up after a while! It will take something north of 200K to make any real impact in the market today. I had thought risk would have taken a back seat over the last couple of days with Greece still at the fore but AUD/USD is up and holding at around 1.07, showing that there is still some appetite around. Anyway, all eyes on the US this afternoon, let’s see if it is like the old days or we get some real moves.

Good morning and Happy Monday…….The Greek parliament passed the latest austerity measures overnight in an effort to avoid bankruptcy and receive another bailout from the EU and IMF. As I’m sure you have probably seen on the news, these measures are extremely unpopular, scenes of rioting and looting in Athens and other places across Greece are deeply disturbing. Greece needs the bailout to secure 14.5 billion for bond payments that are due March 20. The austerity measures announced offer budget cuts of around 3.3 billion for this year. All up they need 130 billion to keep the country afloat.

Saying it doesn’t make it so and the EU and IMF will be keeping a very close eye on how these measures are implemented particularly in the light of upcoming elections. Interesting to note those that voted against the bill last night were immediately expelled by their respective parties. Comments from EU leaders make it very clear they don’t really trust them to deliver as promised.

There has been little change to the markets with EUR/USD slightly up and trading at around 1.3250, EUR/GBP 0.8390 at the top of the recent 0.84-0.8350 range. There is very little on today’s calendar but UK CPI numbers are out tomorrow. Today could be a bit of a rollercoaster though depending on the fallout from Greece and comments by policy makers.

Cheers
Sean
Disclaimer – the content of these posts are the views of CurrencyFair and cannot be considered financial advice. They are made without taking into account individual objectives, financial situations or requirements.

It seems that at long last the finance ministers of the EU have agreed a bailout package to the tune of EUR 130 billion to avoid a March default. The Euro bounced on the news currently trading at 1.3250. It is very difficult to see how, given the level of the austerity measures required to secure the funding; we will see any growth in the Greek economy for a long, long time. I think the markets will remain fairly choppy today as traders decide on what, if any support this gives to the Eurozone. The up move in euro is definitely one of relief for now but how long will it last?

Taking a quick look at EUR/GBP it continues to trade in around the middle of the range for this year at 0.8350. I would look for this pair to move back to the top of the range, towards the 0.84 in the short term. It is a fairly light day in the way of data releases so I expect the ups and downs of the Greek situation to dominate today’s trading.

Hope you all have a good day!

Cheers
Sean
Disclaimer – the content of these posts are the views of CurrencyFair and cannot be considered financial advice. They are made without taking into account individual objectives, financial situations or requirements.