Equity markets in Asia have started the day with a conflicted tone as worries surrounding a showdown in Europe over Greek intentions to restructure their bailout conditions reverberates through out the global capital markets. Despite a reading from Westpac signaling a resurgence in consumer confidence, the Aussie dollar has struck a weaker tone versus the USD, trading into the low .77s. This slide has largely been driven by continued weakness in the commodity complex as iron ore and copper prices continue to decline with iron hitting lows not seen since the current pricing index was created in 2009. The malaise in Oz has also infected the Yen as it continues it’s slide against the USD, nearly hitting the 120 level in absence of any meaningful data releases out of Japan.
The political situation on Europe weighs heavy on the mind of all market participants as comments on the part of the German finance minister indicate that Germany is far less willing to compromise on any potential renegotiation of Greece’s bailout package. With the terms of the current bailout package expiring at the end of the month and Greece looking for a additional bridge financing the souring political mood in Europe continues to raise the spectre of a full blown financial crisis brought about by Greece’s exit from the eurozone. Traders across all asset classes are in decidedly anxious mood as they await the outcome of an emergency meeting of eurozone finance ministers later today. In response the Euro is largely unchanged sitting two cents above its multiyear lows at 1.13 per USD. Equity markets in Europe are in the red across the board with the exception of Ireland and even in North America S&P futures signal a weaker start to today’s trading while the index remains in reach of all time highs.
Within the North American context there will be little in the way of tier 1 economic data to drive price action in both currencies and equities with headline political risk likely to set the tone for todays trading. It will also be important to remain cognizant of WTI as crude oil stocks came in higher than expected yesterday which pushed WTI below the $50 per barrel mark. Yesterday’s movement in oil also had a very sharp impact on the Canadian dollar with the dollar giving up half a cent in a matter of seconds with the loonie now siting at the low 1.26 level versus the greenback.
Further reading:
Greek crisis: Hamburg elections part of Germany’s hard line – compromise on Monday?
Euro wedged between a rock and a hard place over Greece
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