A man looks the board of the Australian Securities Exchange ASX in central Sydney August 7, 2013.
A man looks the board of the Australian Securities Exchange in central Sydney August 7, 2013. Reuters/Daniel Munoz

Bell FX Currency Outlook: The Australian Dollar has opened in the low .7400’s this morning as the optimism that the Greek debt negotiations would be resolved over the weekend ended as Greece has been given three days to pass new reforms in
exchange for a third bailout.

Australia: With the major share markets rising and bond yields falling on Friday in Europe and the US as financial markets expected a deal to be done, the AUD traded as low as .7410 on Friday night. Contributing to the AUD’s fall were comments from US Federal Reserve head Janet Yellen that she expected interest rates would rise this year in the US although the pace would be gradual and data dependent (as she has said a number of times before). Our local home loan data released on Friday for May saw a fall of 5.1% in loans after a rise of 1% in April. Owner occupied loans fell 5.3% versus a rise of 3.5% the previous month while investor related housing loans fell 3.7% after a 3% rise previously. The weak tone of the AUD we see continuing this week. Today we will see China’s export data for June and on Wednesday their Q2 GDP numbers. Depending upon these results we could see the AUD slide further.

Majors: The European Union has given Greece three days to push legislation which involves a number of key reforms through their Parliament before negotiations can begin again for another bailout. The Sunday meeting of the 28 European Union leaders was cancelled. It was reported they would have only gathered to discuss how to handle Greece’s exit from the EUR. The proposal does include the possibility of debt relief in exchange for reforms that the Greek government has been unwilling to make up until now. On July 14, a JPY denominated bond is due for payment in the amount of JPY11.7bn (approx. USD96m) and on July 20 EUR3.5bn is due to be repaid to the ECB. The Greek Prime Minister Tsipras must accept the reforms and they must pass through the Parliament or Greece could spend some time out of the EUR. France wants Greece in the EUR while other countries like Finland are opposed to any more financial assistance to Greece. A statement from the Eurogroup meeting said they “stand ready to consider possible additional measures to smoothen Greece’s debt servicing path … to assume that gross financing needs remain at a sustainable level”. Greek banks continue to be closed and subject to capital controls.

Economic Calendar
13 JUL

  • CH Trade Balance
  • US Monthly Budget Statement
  • JN Industrial Production MoM, CapU
  • NZ Food Prices MoM

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