Another election could well be necessary to produce a government and opinion polls point to a win for the Syriza party, which wants to tear up the existing bailout agreements and renegotiate the loans.

If the EU were to refuse to play, as it says at the moment that it would, Greece would run out of money and would almost certainly have to leave the single currency.

Investors’ anxiety about that possibility has made them even less keen on holding euros.

According to a report on http://www.cleanfinancial.com investors spent the week shifting more of their cash into dollars, Japanese yen and sterling, pushing the three currencies higher.

Unless Athens can pull something miraculous out of the bag, the euro is likely to remain under pressure for at least another month.

A significant factor was anxiety about elections in Greece and France and their implications for global growth, which dampened demand for commodities and commodity-related currencies.

A more important factor was the weak Canadian economic data. Paradoxically, the ecostat most helpful to the Loonie was an American one; a point-and-a-half improvement in the US manufacturing sector purchasing managers’ index helped the Canadian dollar more than the Greenback.

Two which didn’t help it at all were February’s gross domestic product and the Ivey purchasing managers’ index.

The first showed a -0.2 percent monthly fall in output; the second fell by 13 points -20 percent – to 52.2.

Both were an unwelcome surprise and both sent the Canadian dollar lower. Forewarned, investors will be looking closely at Friday’s employment numbers. Weak figures could be responsible for more damage.

Sterling’s lack of progress against the Aussie and Kiwi dollars masked its highest trade-weighted value since August 2009.

The New Zealand dollar’s resilience came mainly from a general tilt towards commodity-related currencies that put the Canadian dollar at the top of the pile.

NW economic data were in extremely short supply, although the couple which did crop up were reasonably helpful.

Visitor arrivals in the year to March were up by an annual 11.3 percent, showing a healthy recovery after the earthquakes in Christchurch and Japan.

Credit card spending was also up; 5.2 percent higher on the year.

The Reserve Bank of New Zealand kept its Official Cash Rate benchmark steady at 2.5 percent. It then went on to confuse investors with a statement that some read as a sign of higher rates on the horizon; others took as a signal for no change.

The statement comes in line with half-year figures released this week that are expected to confirm that the major institutions have returned to profit after two years of turmoil. Lloyds Banking Group, which is 41% owned by the taxpayer, and the 84% state-owned Royal Bank of Scotland are both expected to post a profit.

But Osborne questions the ability of British businesses to raise credit from the banks. “The danger is that, particularly next year, when there is a huge amount of refinancing required, that the small and medium-sized businesses suffer from a lack of access to working capital,” he said. Osborne continued that British banks “are in no doubt that the government wants to see reasonable access to credit on reasonable terms in the small to medium-sized business sector.”

The expected bank profits have boosted the recent Cable rally and we are now seeing the online CFDs market trading in the 1.58s and well on track to the key 1.60 psychological level.

On Friday, the Dow Jones fell by as much as 120 points after annualised growth in gross domestic product (GDP) was found to have slowed from 3.7% in the first quarter to 2.4% in the second. That came on the back of growth of 5% in the final three months of 2009. The US was initially thought to have grown by 2.7% in the first quarter but that was revised upwards on a day of surprises for economists. The US Commerce Department also revised downwards GDP figures all the way back to the beginning of 2007.

The second-quarter slowdown led economists to question whether the US might be poised to enter a period of negative growth later in the year, leading to a much-feared double-dip recession.

The Dow Jones fell sharply after the release of the GDP data before recovering ground to settle down 40.72 at 10,426.44 in lunchtime trading. Economists had predicted second-quarter growth of 2.5pc, but their disappointment was compounded by the revised data for the first three months of 2010. The biggest concern in the City was the size of the downward revisions to previous years’ growth.

In 2009 the economy was previously estimated to have declined by 2.4%, but the figure was revised to a drop of 2.6%. The disappointing growth numbers were compounded by the International Monetary Fund’s (IMF) annual report on the US economy. The IMF said there may be a need for the Obama administration to increase the amount of fiscal stimulus in order to boost the recovery, warning the “outlook remains uncertain”.

As we look ahead this week, Interest rates will watched closely with monetary policy meetings taking place in several countries over the next 4 days. Tonight, Australia get the ball rolling followed by the UK, Eurozone and The Czech Republic all on Thursday.

Following the softer than expected Australian CPI figure, the Reserve Bank of Australia are now deemed unlikely to move rates – a change away from the previously anticipated tightening – despite the stronger, but very volatile, manufacturing PMI number. No change from the BoE or the ECB is also on the cards but as usual, it will be the post-meeting press conferences that will draw the market’s attention.

Article by Currencies Direct.

The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.

The FTSE 100 today is being firmly supported by the banks, with companies such as Barclays, HSBC, Standard Chartered, RBS and Lloyds all contributing as much as 25 points to today’s Index gains.

Deutsche and UBS lift banks

Today’s gains are being firmly dictated by the strong demand for bank stocks, after UBS posted better than expected earnings whilst Deutsche bank, whose results were largely in line with expectations, showed loan loss provisions were decreasing strongly.

The fact that now we have some major European banks towing a similar outperforming line to that of their US peers, it raises optimism that banks in the UK and wider Europe will also outperform. Naturally therefore, we have seen clients eager to buy into the banks such as Barclays, Royal Bank of Scotland and Lloyds Banking Group who all report their respective earnings in early August.

Basel relief

Elsewhere in the online CFDs markets we have also seen investors showing signs of relief after news that the Basel Committee will relax some of its tougher proposals on bank capital and liquidity requirements. It appears that the intensive lobbying activities of major European banks has worked and investors are hopeful that with there now being fewer locks and chains around bank activities than first feared, they may be able to report higher earnings to their shareholders.

AstraZeneca has also seen high demand in early trading after documents released by the FDA showed that comments by the governmental body on the company’s Brilinta drug were more positive than expected and this now raises hopes that they will approve the drug when they meet tomorrow. Shares moved 3% higher as a result.

Intercontinental Hotels shares however slumped over 7% after Barclays placed 29.9m shares at 1120p each, which is at the low end of the predicted price range.

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CFD Trading news from Joshua Raymond, Market Strategist, City Index.

This material should not be construed in any circumstances as a recommendation or offer to sell or recommendation or solicitation of any offer to buy any security or other financial instrument.

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Sterling hovered around its $1.76 starting point last Monday before moving lower. It bounced briefly from $1.72 on Wednesday before bottoming out at $1.7050 the following day. A Friday rally took the pound back up to $1.73 and it opened in London this morning at $1.7250.

The Australian dollar’s performance against sterling closely matched that of the New Zealand dollar. Both of them did well as a result of greater confidence among investors that the world’s economy really is on the road to recovery. Britain’s strong GDP figure helped that impression, as did a series of positive data from the euro zone. Also working in favour of the commodity-related currencies were the rising prices of the commodities themselves, with the CRB commodity index rising by 1.8% on the week.

When the Reserve Bank of Australia published the minutes of its last board meeting it included another reminder that its main concern is ‘the medium term outlook for inflation’. That standpoint makes this week’s consumer price index inflation figure an important one. Analysts predict that prices will have gone up by 1.0% in the second quarter of the year, lifting the annual rate of inflation from 2.9% to 3.4%. If they have, the assumption is that the RBA will raise its cash rate again at next week’s meeting, election or no election.

That strong GDP figure could give sterling a further boost this week but it is also positive for the Australian dollar, in that it reinforces the notion of a recovering global economy. Buyers of the Australian dollar should continue to hedge 50% of their requirement. This may or may not hold true if you are trading CFDs Online.

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