Foreign Exchange Report : Greek Political Turmoil Threatens to Deepen, Causing Selling Pressure on High-Yielding AUD NZD and ZAR

4 Nov 2011 at 9 AM - Written by John Cameron

STORY LINK Foreign Exchange Report : Greek Political Turmoil Threatens to Deepen, Causing Selling Pressure on High-Yielding AUD NZD and ZAR

The Pound Euro exchange rate (GBP EUR) is 1.1572. The Pound Dollar exchange rate (GBP USD) is 1.6001. The Pound Australian Dollar exchange rate (GBP AUD) is 1.5414.

Today brings the latest ‘day of reckoning’ in a long line of ‘days of reckoning’ for Greece. The debt-addled Hellenic state’s future membership of the Eurozone hangs in the balance, following the events over the last 24 hours, which saw the leader of Greece’s opposition, Antonis Samaras, call for an emergency general election, prior to staging a walk out of members of his party from the Greek parliament.

Earlier in the day, Greek Prime Minister George Papandreou, appeared to back-track on the threat which he made earlier in the week to stage a popular referendum on whether his troubled nation should accept the terms of the EU’s bail-out package. He suggested to Greece’s parliament that he had made the threat in order galvanise support from Greece’s opposition party for the measures.

Papandreou’s turnaround follows his meeting on Wednesday with other EU leaders, where it was re-enforced to him that Greece would not qualify for its next tranche of bail-out funds,( which the country needs in order to fulfil its current debt obligations), if his ruling PASOK party did not press on with implementing the austerity measures.

The Greek situation remains on a knife-edge, with Papandreou facing a vote of ‘no-confidence’ in the Greek parliament later today. If he loses, which appears likely, then the current opposition parties may seek a mandate for Greece to exit the Euro, causing a potentially catastrophic spread of bad debt via a contagion effect between European retail banks.

The other major risk event for today comes in the US, with the release of October’s Non-Farm Payrolls data. Last month’s figure came in significantly higher than analysts’ expectations at 103,000 and commentators are expecting a similarly healthy number this afternoon. It appears highly possible that the number will print at lower than expectations; if this happens, then expect the USD to gain safe-haven support and the high-yielding AUD, NZD and ZAR to lose ground.


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