The Financial Fixed Odds update from David Evans, Market Analyst, BetOnMarkets.

This morning’s main move is an increasingly familiar one – that of the euro selling off. On top of yesterday’s already bad news, credit rating agency announced that it rates Greek bonds as being just above junk.

The Euro/Dollar spread is close to it’s May 2009 low of $1.3211, down 0.4% today while the Euro/Sterling spread is within 100 pips of the 2010 low, down 25% today.

Greece has been demanding softer terms for any loans/bailouts than Northern European countries have been prepared to provide. However, as time goes on, those counties (especially Germany) may have to accept that forcing market rates on Greece could trigger widespread defaults amongst other PIIGS economies (Portugal, Iceland, Ireland, Greece & Spain). That could ultimately do more damage than the feared moral hazard a soft bailout could create.

The pound is down this morning but holding up relatively well relative to other major currencies. There have been fears that a hung parliament would lead to a run on the pound, but as Goldman Sachs recently pointed out, currency markets appear to be increasingly comfortable with no majority result. Whether markets are comfortable or whether the hung parliament has just been priced in remains to be seen.

The day’s other main mover is the Aussie dollar sinking by around 0.6% against the yen and dollar (AUD/JPY and AUD/USD). This comes on the back of the Australian central bank dropping hints that it’s focus is protecting the recovery (i.e. not raising rates again) not necessarily cooling it.

Trading Today

Coming up today, highlights include German Ifo business climate estimations at 09.00 industrial new orders at 10.00. The pound will come under further scrutiny at 09.30 GMT with the release of preliminary UK GDP figures. Analysts are expecting a GDP rise of 0.4%, thus ensuring two quarters of consecutive growth.

Around midday there’s a raft of Canadian data with inflation (CPI) at 12.00 and retail sales at 13.30. As for the US, at 13.30 we have durable goods orders and new home sales at 15.00.

The biggest unknown will be the outcome of the G20 meeting starting today.

Forex Update: 10.00am

As the morning has progressed, the euro has show some real fight, with the British pound heading in the opposite direction. Recent economic data has been the driver of this with German business climate coming in ahead of expectations and UK GDP limping in at +0.2% vs the +0.4% expected.

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