Greek Vote too tight to call

Today's Highlights

Greek Vote too tight to call

Australian retail sales slow

Chinese shares slump

US public holiday saps liquidity

FX Market Overview

A very interesting article in the New York Times yesterday highlighted the problems across Europe because we have been so focussed on Greece that we tend to forget. They highlight the solidity of Finland's governance; in spite of which, Finland in in its eighth year of contraction. Even aside from Finland's problems, we know Spain still has 23% unemployment, we know about all of France's woes, not to mention 23% unemployment in Spain etc etc etc. So perhaps the greatest test for the euro after Sunday's referendum in Greece is what has to happen before the Eurozone itself gets back to prosperity.

The vote on Sunday delivers the sort of uncertainty that financial markets thrive on. Volatility ensures and those who speculate on foreign exchange movements can buy and sell at either end of the market. That presents opportunities for those - just like you - who need to buy or sell for commercial reasons and by commercial, I mean to fulfil a purpose rather than just gambling on the fluctuations.

Automated orders have yielded fantastic results for many of our clients in the past few months and this weekend is perhaps the most obvious time to take advantage of the unknown elements of the Greek vote. Have a chat with your FX Consultant to see how you might benefit or email me and I will do so.

Aside from the big fat Greek referendum, there has been other news....honest. US employment data was released a day due to today being taken as a public holiday in lieu of Independence Day. A very Happy Independence Day to all our American readers. By the way, it's not too late to come back under British control if you are worried about Jeb Bush being your next President. Her Majesty is very nice and she makes a rather excellent Head of State.

Aaaanyway, the US employment data was better than expected. The US Dollar strengthened a little on the news but few traders were likely to get heavily 'long' of the Dollar ahead of the Greek vote and the impact this could have on the EUR-USD rate. If the Greeks vote to accept the EU funding plan, the euro will strengthen and that is still a possibility.

The same is true of the Sterling - Euro exchange rate. We have seen this drop 3 cents from the €1.43 spike at the end of June. I suspect that is a matter of traders taking profit and sitting on the side-lines ahead of Sunday's vote. The lack of US traders today is likely to mean less volatility in the run up to the weekend but early trading in Asia on Sunday night will be hectic whatever the outcome.

And Chinese shares are all over the newswires. An unprecedented slump in share prices in China has caused the Shanghai index to lose 25% of its value in just 3 weeks. Investigations into suspicious share dealing is underway but the falls in China have dragged shares in Asia lower overall. We have also seen a fall in the value of the Aussie and Kiwi Dollars. China is such an important export market for both Australasian countries that this was an inevitable consequence.

The Australian Dollar was also knocked by a poor retail sales report in which the 0.3% growth in May against a market forecast of 0.5% and the previous month's data was also revised lower. This is further evidence that the reserve Bank of Australia may need to lower interest rates again and that weakens demand for the currency amongst yield-hungry investors.

Away from the markets, I love the spin that news reporters put in stories. A great example is the headline in the Daily Mirror which said a man was "jailed for blasting out No.1 hit Matchstalk Men and Matchstalk Cats and Dogs". The underlying story is that the guy drank a lot, entertained his friends late into the night and pumped out all manner of music until the early hours. The fact that one of those songs was the dreary Brian and Michael number is neither here nor there. But he was jailed, so part of the article is right. Never let the facts get in the way of a good headline as they say.