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Chinese still taking stock of losses

Chinese still taking stock of losses

To close the week last week the GBPEUR continued to steadily pull back from the surge of the middle of the week. As we open today there is little further movement and so we are poised to take direction now of the movement from here. The same story appeared for the GBPUSD and with a general retreat during the last few days of the week, to pull back under the 1.5500 mark once again.

This week we can turn our attention back to Greece where they should hopefully be concluding talks to finalise a new 86bn Euro bailout package. Between Greece, IMF, European stability mechanism and the ECB they are attempting to finalise an agreement or at least secure a bridge loan in order for Greece to meet their next payment due on the 20th. 

Continuing problems in terms of Chinese stocks are plaguing the global markets. Currently the stock values are not much better than the year and a half lows that we saw toward the close of last week. This is spilling over to commodity currencies in the region, for example the Malaysian Ringgit, sapping strength from the exchanges. The risk that the stock woes put on the markets means that the USD will be benefitting from the flight to safety play that so often accompanies this kind of stress. The effect on the Australian economy is likely to be marked as well, given that the primary consumer of Australian minerals is China and as the slowdown in company performance in Chinese companies gathers speed, the reduction in this consumption will be likely.

It is a quiet Monday in terms of data releases, with the most notable being speeches from the Fed’s Lockhart and Fisher who will be commenting on how the Fed observes the current US economy and the value of USD

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