Greeks say No, Euro broadly weaker

July 6th: Highlights

• Greeks say NO, Euro broadly weaker
• GBPEUR 1.4090; GBPUSD 1.5500
• Aussie Dollar loses 1.5% against Sterling & 6-yr low against US Dollar
• U.S Dollar Index rises 0.32% to 96.68

Sterling Comment

We saw UK Services PMI come in strong at 58.5 (one point above the expected 57.5), but had limited impact with everything else that was going on. This week is action packed with data, keep an eye out for industrial and manufacturing production on Tuesday followed by Wednesday’s Budget, the BoE rate decision on Thursday and trade balance data on Friday. Markets may still be nervous despite the Greece result – times are still uncertain! GBP/USD is currently trading at 1.5550 and GBPEUR is at 1.4110.

Greeks say no with conclusive 61.3% vote

The “no” vote was conclusive with 61.3% of the Greek vote sticking the proverbial middle finger up at the creditor bailout proposals. Sentiment was that the terms of the deal were ‘humiliating.’ Finance Minister Yanis Varoufakis has tendered his resignation in a move that was announced on his blog this morning. Some analysts believe his exit might have been more forced than it appeared and may actually be a shrewd move by Greek PM Alex Tsipras ahead of some frantic negotiations over the coming critical days. Varoufakis wasn’t exactly the most popular from Team Greece.

The Euro was pushed down by three quarters of a percent against the pound and US Dollar as the market reacts to the vote. Investors are now pondering whether this is the first major step towards a Greek exit, or whether the vote allow Greece to renegotiate of bailout terms. It is 90th minute stuff as there are only a few days to thrash out a deal before the banks totally run dry. Something has to give.

Global Comment

The US Dollar Index, which is a measure of USD strength against a trade weighted basket of six major currencies, has risen 0.32% to 96.69, boosted by weakness in the single currency.

EUR/USD traded on Friday between 1.1120 and 1.1064. Towards market close on Friday, the pair hit lows of 1.0971. Since the No vote, the pair has begun to trade higher. Volatility is likely to continue until we hear more from the Eurozone on Greece.

The Aussie dollar depreciation continues. Tonight will be key as the monthly interest rate meeting and announcement is released after midnight. We look forward to the Governor’s comments in respect of the recent weakening of the Aussie dollar and how it is affecting the nation’s economy. AUD is currently trading at 2.0770 against the pound, having traded at an early morning high of 2.0850 – exchange rates not seen since 2009. Weakness in the Chinese stock market, Australia’s largest trade partner is not helping.

Have a fantastic week ahead