Good morning

High Low High Low
EUR/USD 1.0896 1.0866 USD/ZAR 12.0400 11.9800
GBP/USD 1.5254 1.5217 GBP/ZAR 18.35 18.24
EUR/GBP 0.7156 0.7131 USD/RUB 52.10 51.70
USD/JPY 119.20 119.00 USD/NGN 199.2 198.5
GBP/CHF 1.4567 1.4532 S&P 500 2,113 2,107
USD/ILS 3.9132 3.8817 Oil (Brent) 64.93 63.91

Would you not agree we live in a funny old world. Only yesterday did we report that Eurozone officials criticised the “amateur” Greek finance minister warning that time is running out to stop Greece going bankrupt. Well well well wouldn’t you know PM Tsipras has shuffled hi bailout team and side-lined the “amateur” finance minister Varoufakis.  The eurozone representative that made this comment on Friday that the fresh package of loans to Greece (€50-60bn) would be of a “completely different order” to the current €240bn rescue package. Suffice to say after negotiations reached boiling point last Friday as negotiations descended into a screaming match, the Greek PM had to make a move and remove the “amateur” out the equation in the hope that negotiations can now take place in a more calm and professional manner. The markets liked this move and there is hope that an agreement and more importantly a solid list of reforms can now appease the IMF, ECB and Greece’s other creditors.  Greece has an enormous debt mountain to climb with funds due later this week, mid-May and July/August when €6.8bn of government bonds held by the ECB are due to mature. I have no doubt that the creditors will have to extend the repayment period for all these loans not to mention adding to them to keep Greece floating. As we saw in Argentina in 1982, 2001 and most recently 2014 when they defaulted the country is still standing (albeit on 1 leg). One really must question whether throwing good money after bad is really the answer to Greece’s woes. At some point the IMF and ECB should sit down and ask this question seriously. In my humble opinion, Greece SHOULD default stay in the eurozone, reform and start again. What is the point of handing out another €50-60bn when part of that money will simply go to paying back present loans. In fact JP Morgan Asset Management noted recently there is a 50% chance of “some form of Greek sovereign default.” The time to act is upon us and I think if Greece had to default and clear the cobwebs the markets would actually see this as a positive and you could very well see the EUR RALLY (yes I am not going mad).

Over the past 72 hours the EUR has in fact traded sideways to higher. No doubt the FX market is viewing the negotiations closely and hoping that a resolution will be found. Considering all the bad press recently you would think the EUR would be trading BELOW PARITY. You know what I am about to say, yes I really do think the FED and ECB are propping up the EUR so as NOT to increase FX volatility. This would just add to their mounting problems. While I still believe PARITY is coming, it will only be towards Q3-Q4 when we start to see this happen. By this stage the US would have raised rates at least once, Greece will have had some solution and we would have enjoyed our summer on the beach.

Sky news reported this morning that Frank Maloney, sorry Kellie Maloney (the former boxing promoter and UKIP candidate) said a vote for UKIP is a wasted vote. Furthermore she continued “If we want to stop Labour and the SNP I think you’ve got to vote Tory. A vote for UKIP would be quite wasted, I believe. I know UKIP are not going to like hearing that, but if they’re honest they would say the same things as well because they’re not going to get enough seats to wield any power. I think they’ll get four or five seats, maybe.” Kellie, I had enormous admiration for you when you were a boxing promoter and taking Lennox to the world title, I have even more admiration for you now. My dear reader, I am not trying to be political here by indicating who I support. What I am trying to say is for the UK economy to continue on the current growth path, ONLY the Conservative party can achieve this. After the horrendous comments by the leader of the SNP (Trident) I cannot help but feel a tinge of utter fear over how the UK will end up should the country vote in favour of a Labour/SNP coalition. 5000 business leaders, 15 heads of FTSE companies employing in excess of 200,000 people (not to mention their dependants) should take note and spread the word. We want to keep our jobs, we want to keep our families healthy and content, we want the Conservatives. Full stop!!

I sincerely hope the FX market knows something the rest of us don’t. The GBP has rallied handsomely over the past week rising from 1.46 to a high of 1.5254  today. It would appear that there is more “petrol in the tank” and the GBP has the legs to continue through 1.53 before finding resistance. Depending on the results next week the GBP will either end up shy of 1.6000 (Cameron win)  OR crash below 1.45 (Ed wins) heading towards 1.40. For all the people that voted Labour/SNP your US and European holiday just got a lot more expensive, your jobs will now be on the line and you will be worse off by 2020. That my dear reader is your choice!!


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