The vote on a new set of Greek austerity measures was passed by Parliament despite ongoing protests. There is another vote which will be required in order for the measures to be implemented, but is also expected to pass. As a result, the euro is trading higher as the likelihood of a near term Greek default appears to have been avoided. The dollar remains under pressure despite a pick up in pending home sales. S&P, a ratings agency, warned that missing a payment on its debt would be considered a “selected default” and the US rating would suffer immediate and steep consequences. In the UK, strikes, weak economic data and dovish comments have sent sterling to near 8-week lows against the euro and 26-year lows against the Aussie dollar. A dip in an overnight release of consumer confidence will also weigh on sterling.

Against a weakened US dollar, sterling has managing to hold onto recent levels, but everywhere else sterling’s value is declining. The outlook in general for sterling is bleak as data has helped to set a soft tone for the British pound. Money supply and consumer credit data failed to meet expectations

US Dollar

Pending home sales were surprisingly up, but the dollar continued to head lower. Comments from S&P ratings agency were not helpful. The agency warned that if the US were to miss a debt payment that it would lower its Aaa sovereign debt rating to D, which would be considered a “selected default”. The US government has a payment due on August 4th and without a vote to raise the debt ceiling, the payment to creditors could be missed.

Euro

The vote on austerity measures in Greece passed and supported the euro. The vote on implementing the measures is expected to pass as protestors continue to take to the streets. Nevertheless, financial markets cheered the outcome of the vote and will now look to this weekend’s FinMin summit where EU nations will decide on releasing funds to Greece so that the country can avoid a near term default on its debt. Economic data has also provided the single currency with some support.

Japanese yen

Japanese PMI came in at 50.7 for the month of June. The figure was still in expansion territory, but the pace of growth had slowed from last month’s 51.3. The components within the data showed that industries were bringing forward production in order to avoid possible summer month blackouts.

Travelex Global Business Payments Malta, freephone: 800 733 22, www.travelex.com/mt/

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