We expect the euro to slide further versus the USD. Greece is not expected to get the bailout until mid-November but they have said they will run out of money this month. European finance ministers are getting tough on Greece and want it to take control of its spiraling debt.
Many people believe Greece will default sooner or later. Greece will get the bailout and fellow euro zone countries will pass the the next bailout due to the knock on effect it will have on other euro zone countries if it does default.
Stocks and equities have also fallen today. Investors are vary than ever. Gold has fallen. Investors are investing in safer assets like government bonds. Gold has risen significantly in recent months due to investors selling stocks and investing in gold which was seen as a safe haven but the amount who have done this has been unprecedented and now investors are selling their positions as it’s hit record highs and is coming down now.
European finance ministers are considering making banks take bigger losses on the Greek debt.
Meanwhile, the US is hoping their bill to strengthen the Chinese currency will pass. The US has said weak Chinese currency is giving China an unfair advantage on their exports and has cost the US jobs. China is increasingly getting frustrated with the US, being accused of doing this on purpose to bolster their exports. The possibility of the USD getting stronger both against the Euro and GBP is very strong. We see some further downward movement on Euro/USD and GBP/USD as investors are investing in the USD as it’s seen as a safe haven.
In the UK there has been mixed data. Construction contracted but manufacturing unexpectedly rose in September. BoE will probably delay QE due to positive manufacturing growth.