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East Midlands Chamber News

Currency review by MoneyCorp

Chamber member and BCC-accredited currency expert, Moneycorp, offers a monthly insight into the fast moving world of foreign exchange.

And its round up of the markets in June and early July makes interesting reading, with its focus, not surprisingly, on the financial situation in Greece.

It said the 'Grexit' had been the main talking point for the markets in the UK for the past few weeks.

As of today, talks continue to find a solution to Greece's problem, with uncertainty still about whether a solution will be found that will enable Greece to stay in the eurozone. But on Monday the country's finance minister resigned following Sunday's referendum rejecting Europe's terms for debt repayment, saying that Greece would run out of money in five days, ie, tomorrow.

If no resolution is found and Greece leaves the eurozone it will be the first country to do so since the currency was set up in January 1999.

Sterling strengthened in June to a high of 1.4168 euros, a rate not seen since August 2007.

UK employment data in June included the surprise news that wages were up on average by 2.7% on the year, resulting in a further boost for the pound.

It was not the overall best performer for the month though, that honour went to the Norwegian krone.

US retail sales went up by a monthly 1.2% in May, a stronger outcome than the 1.1% increase forecast by analysts. Sales excluding cars were also better than expected, rising by 1.0%. But investors did not see the numbers as a reason to buy the dollar.

The North American dollar's gain was the South African rand's loss. It fell to an all-time low against the pound and a 13-year low against the US dollar after the jobs data came out.

Other emerging-market currencies suffered too, the logic being that the strong data increased the likelihood of higher US rates this year and threatened the flow of outward investment.

The Canadian dollar was helped by the US numbers and even more by its own employment data, which came out at the same time and showed employment rising by 59k, six times what was predicted.

Japanese inflation was reported earlier to have slowed to 0.3% despite household spending rising by an annual 4.8%.

French consumer confidence rose by a point to 94 and Italian consumer confidence is expected to be steady.

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