Even though the euro has hardly staged what you would refer to as a relief rally, markets have reacted positively to the proactive approach Greece has shown so far following their recent General Election. Having not met any of heads that make up the Troika or other European leaders, yesterday the finance minister commenced a whirlwind tour of Europe to build up support for its plans to restructure its large debt pile. Borrowing costs on the Greek 10 year bonds declined from their recent 18 month high, EURUSD looks to have stabilised above the 1.1300 level and indices are rebounding. At least for now the hard line that Syriza was taking in the run up to the election is being tempered somewhat, however there is still a long way to go in this saga and the euro for one has to contend with the ECB’s QE which is not something that would normally lead to currency strength.
The big overnight news was a surprise cut in rates from the RBA which has sent AUDUSD to a new five and a half year low. Having been trading above 0.7800 ahead of the decision we now stand at 0.7630 at the time of writing. We warned yesterday that this was an important event to keep an eye on, but few were of the view that a cut would come as soon as now. The NZDUSD has also plunged in sync and has now taken out the 0.7200 level.
Today things are quieter on the economic data front but later this evening focus will be on New Zealand again as unemployment data is released and the RBNZ’s Governor makes a speech.