Spain Dominates The Headlines…

The pattern continues for the Single European currency where it has struggled to hold onto gains with the currency hitting new lows, dropping below 1.2500 in recent days. Despite a stronger appearance in equity markets and slightly improved risk appetite this has failed to provide any support for the Euro as Greece comes in second in the race to grab headlines to Spain. A latest poll indicating growing support for austerity parties in Greece has helped to ease Greece concerns slightly.

A report by the Nationwide claims that house prices remain “fairly stable” in spite of the UK falling back into recession earlier this year. Figures showed that prices increased by 0.3% in May to an average of £166,022, but still almost a per cent lower than last year. “Demand for homes remains subdued on the back of weak labour market conditions, but the lack of homes coming onto the market is providing support for prices,” according to Robert Gardner, the Nationwide’s chief economist. “This is in part a reflection of the low rate of building in recent years which has failed to keep pace with household formation.”

Without any headline UK data, Sterling remains playing third wheel to the decline in EUR/USD pair with cable trading at 1.5521 and unmoved against the Euro trading just below the key level of 1.25 and 1.2494. If we see a strong Jobs number tomorrow in the states we could see Cable edge closer towards the year’s low of 1.5235.

Finally growth numbers out of India suggested their economy slowed to 5.3% in first quarter of this year which was the slowest pace since 2003. This has been largely attributed to a widening trade gap and poor investment. One has also noted the recent weakening of the INR which has fallen over 25% against the Greenback and currently trades at 86.67 against Sterling. This combined with high inflation and a slow down in global demand has made products within India very expensive.This has lead to political pressure falling on India’s PM who has admitted his government must to more to kick start the economy whilst facing a backdrop of continued corruption scandals in the Indian media.

Report by Philip Ryan