Daily Archives: June 15, 2012
What can you expect this weekend with the Greek elections? Personally I feel we may not see the volatility many expect now – But we may well do in the coming weeks! Greek election effect on the currency market
I have had hundreds of calls from my regular clients in the past few weeks in panic about the pending elections and quite frankly this is unprecedented therefor it is extremely hard to know just what state or position the currency market will be in following the weekend elections.
Any of the following may happen:
The Anti Austerity party win, the Euro weakens as it suggests Greece may leave the Euro and the Dollar gains strength. Riskier currencies such as AUD, NZD and ZAR lose strength as global economic concerns are high.
The Anti austerity party win, the Euro strengthens as it is seen as one of the bad parts of the apple that may be due to be cut out. The Dollar weaknes and the riskier currencies strengthen.
The Pro austerity party wins the Euro strengthens the Dollar weakens and riskier currencies gain strength as it would suggest Greece may be willing to carry on with their austerity measures and although potentially this could easily change a little further down the line it may look like Greece will stay in the Euro for the time being.
Either side wins, the markets are a little jumpy but we don’t see any major movements – personally I think this is the most likely, the key for me will be what we actually see come out in the days following the elections… What comments are made and which actions are put in place, this will be the real bread and butter information for investors and this will be the key to where the markets may head in my opinion.
Of course anything can happen so do not take my work for it. and there is no doubt we are about to engage in one very rocky ride, I hope whichever way you need the currency markets to move for you they head in the right direction and I will try and come back to you all with updates throughout Sunday evening.. I am however away for the weekend so no promises!
If you have a currency transaction to carry out next week or in the next few months or carry out regular transfers and you want to have an experienced currency broker on your side then I can help you both in terms of getting you the best rate of exchange when you do carry out your transfer alongside helping you make the decision as to when to book out a rate of exchange which may save you a huge amount of money too. Email me directly firstname.lastname@example.org with a brief description of what you need to do and a contact number and I shall be happy to get in touch with you personally.
Last night Mervin King the head of the Bank of England announced additional stimulus into the UK financial sector. This includes a balance of £5 billion a month to become avalible for the bank to loan to high street banks, plus an extension credit line of an additional £100 billion over the next 12 months. The aim is to lower costs of borrowing for companies and inderviguals as the eurozone crises puts a “dark cloud,” over the UK market. All these funds are coming from new money that he was clear he did not want to be called Quantative Easing QE (see blog for definition of QE,) to avoid the normal reaction by the market when these words are muttered, however it is really more QE!
The bank has already pumped £325 billion into the economy through its quantative easing program. It has been commented that the QE done so far has not reached the people it waas enteneded for due to the eurozone crisis, the theory is that due to banks not being sure whether a fall out on the continent will result in addiitional funds being needed, they have slowed the release of funds which has pushing the cost of borrowing up for companies and mortgages.
Overall I think this is good news, even thought he markets will react negatively initially. We will however only see the results in the coming years not weeks, and we have to be aware that the UK economy is not exactly booming! I think it might be worth remembering readers that the UK is the only country in Europe that has had a double dip other than Italy!
Plus, of course, this news could all be over shadowed in the coming days due to the Greek election. The latest from Europe is that the markets punished borrowing yesterday cost for troubled countries. Spainish bonds went over the dangerouse level of 7%, (where Ireland, Portugal and Greece all needed huge bailouts.) Italy, which everyone shoud keep an eye on, also saw recorded costs. Yesterday they were paid over 6% to borrow money which is very unafordable in the medium term, they were paying 3.25% last month!
I think it is clear to say things are only going to get worse in the short term and as a result the markets will continue to become very volitile. If you are in the position needing to make a currency exchange in the weeks or months ahead, make sure you review your exposure TODAY before the greek elections. To put how big this weekend could be, it could fundermentally change the worlds second currency! Even some brokers are closing all limits and trades over the weekend in anticipation of what is round the corner!
You can email me directly here email@example.com quoting PSF in the subject title and I shall be more than happy to assist you both in terms of getting the best rate of exchange and a high level of customer service for your currency transfer. Otherwise feel free to call on 01494-787-478.
Eitherway I wish all traders good luck over the next few trading sessions!