High	Low			High	Low
EUR/USD	1.1126	1.1063		USD/ZAR	12.5934	12.4740
GBP/USD	1.5422	1.5356		GBP/ZAR	19.38	19.20
EUR/GBP	0.7224	0.7196		USD/RUB	57.76	56.60
USD/JPY	121.54	120.46		USD/ILS	3.8067	3.7709
GBP/CHF	1.4555	1.4510		S&P 500	2,062	2,045
GBP/AUD	2.0783	2.0540		Oil (Brent)	58.20	57.14
	12.5478	12.4234

Since I started off yesterday’s blog about the falling Chinese equity markets, it’s only fair that I update you about it. The index I showed you yesterday is up 17% today. Go figure! Well actually it’s not entirely random, Beijing have introduced measures to boost liquidity and calm panicking investors, it appears to be working. Margin requirements have been relaxed, banks are now permitted to lend to companies wishing to purchase their own shares, even the police are involved, with announced plans to thoroughly investigate any incidences of “malicious” short selling, and here’s one I like, investors (read senior execs and board members) with more than 5% stakes in a company are banned from selling shares! You can’t make this stuff up. This might slow down the decline, but these aren’t positive fundamentals supporting stocks, so there is no reason for the deleveraging not to continue. Expect more exciting days ahead.

 

Greece has heavyweight backers and I’m not talking about Russia. Both the United States and the IMF are urging debt relief for Greece. I can understand the sentiment if you look at Greece in isolation, if in fact Greece was the only Eurozone country in crisis then debt relief would be the right thing to do. But Spain, Portugal, Italy and Ireland have all had difficulties since the global financial crisis as well. If you give relief for one country aren’t you likely to be asked by others? No…. unfortunately debt relief is a line that will be terrifying for Eurozone creditor governments to cross, and it is impossible to imagine their electorates would permit it. Perhaps the tough stance of the creditors is working because Greece has proposed a new plan over 3 years, with promises of serious reforms to come in the next few days. I imagine Eurozone creditors are rather like the villagers in the town with the sheep boy who had amused himself by crying wolf. There will be some scepticism, and somehow for this crisis to be resolved, trust has to be rebuilt. I fear the onus is on the Greek side, and we can only hope that these proposals are being put together in good faith.

 

Yesterday we saw sustained dollar strength, indeed the bearish momentum from the day before was so strong that the probability of the 1.14+ high in EUR/USD being the start of the next phase of dollar strength is rising. This morning we are seeing that bullish dollar momentum being somewhat reversed, but this has the feel of short term traders booking profits, I fully expect the next impulsive moves to be in favour of the dollar. Still.. what is interesting to observe is the fact that the euro has  not been participating in this anti-dollar recovery. This speaks to the weakness of the single currency, and the view that it will be the weakest horse when the dollar bull trend continues.

 

We have the Bank of England’s monetary policy decision to look forward to later, plus some jobless claims data in the US. I don’t believe anyone expects any change in interest rates just yet in the UK. I would expect them to follow the U.S, and frankly it would be surprising if they do anything this year. The UK budget announced yesterday will be as good as an interest rate hike for activity in the UK anyway!

 

 

 

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