High Low High Low
EUR/USD 1.0849 1.0820 USD/ZAR 12.4606 12.3300
GBP/USD 1.5624 1.5582 GBP/ZAR 19.43 19.20
EUR/GBP 0.6958 0.6936 USD/RUB 58.78 56.26
USD/JPY 124.20 123.97 USD/ILS 3.8298 3.8038
GBP/CHF 1.5043 1.4975 S&P 500 2,127 2,124
GBP/AUD 2.1275 2.1109 Oil (Brent) 27.33 56.91


Greek banks reopen today, for the first time in weeks. Capital controls still remain place, but the bridging finance from the ECB should go some way to ensuring that bankruptcies don’t occur. There are restrictions however: (1) €60 per account per day withdrawal limit; (2) weekly withdrawal limit of €420; and (3) the ban on inbound/outbound international transfers remains for Greek businesses. There will be enhanced security at branches no doubt, which are likely to be open for extended hours as a pent-up demand for cash should lead to a surge of customers. If the crisis in Greece has not already evoked memories of the Great Depression, those queues today are likely to illustrate the crisis quite nicely.


If you weren’t already aware from our constant imminent rate hike chatter, the price action in gold this morning will have surely done the job, the yellow metal fell hard this morning, although it’s recovered somewhat. It’s currently down almost 5% month to date, but was as much as -7.5% (MTD) this morning. I would expect further pressure on gold as we get closer to rate hikes in both the UK and the US. You might think of this as the flip side of dollar strength.


This morning has started with a mild recovery from last week’s dollar strength. It appears at the moment to be a brief respite within the trend. We will continue to look for further dollar strength, and at the very least relative strength in the pound sterling as well. There is every chance that EUR/GBP could attempt a run towards 0.65 (i.e., above GBP/EUR 1.53), where the pair should find multi-year supports. What we struggle with is the possibility that GBP/USD can continue to hold strong in a period where EUR/USD drifts lower. That is not something that happens for a sustained period, and if it were to happen it is likely to lead to comments from the Bank of England which will characterise the phenomenon as a rate hike. In that scenario GBP/USD is sure to quickLY collapse as the rationale for sterling strength would have been withdrawn. For now GBP strength continues unabated with EUR/GBP as low as at any time since the Global Financial Crisis in 2008.


There is precious little macro data of consequence today. It would not surprise us if we see some drift in major currencies at least during the European morning, this is of course contingent on orderly activity in Greece. One can never guarantee that!






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