Greece has voted. The result is that the Greek PM George Papandreou wins the vote of confidence which will allow him to steam ahead with the austerity programme.
He won the vote from 155 out of 300 lawmakers, although the big challenge is the approval of a 78bn euro package of budget cuts to prevent the country from default. It is said that if Greece doesn’t receive the aid, the country will officially be bankrupt in July.
We had existing home sales data in the US yesterday, and the news wasn’t great. Sales for May had declined to their lowest in 6 months, which is a concern because it means that the housing market is halting other areas of the economy. On the flipside, in the UK we had a bit of a boost that our budget deficit narrowed to 17.4bn pounds for May, after revenue growth from tax outpaced government spending.
The FTSE 100 had an exciting day yesterday, pushing 81 points higher to 5775 after eager traders were awaiting news of the Greek parliament vote of confidence. Commodities and banks were back on the bounce as traders shunned safer utility stocks, in the wake of Goldman Sachs cutting price targets for the sector. The main index has support at 5600 and is showing resistance at 6100. We have the US interest rate decision at 5.30pm today, and Fed chairman Bernanke will also discuss the FOMC’s economic plans and projections. Today also sees the release of the MPC Minutes. Expectations are for a dovish statement following the departure of hawk Andrew Sentence, and new boy Ben Broadbent is expected to have voted to keep rates on hold. Yesterday’s comments from Paul Fisher, that further quantitative easing isn’t out of the question, have also lifted expectations of further dovishness.
Yet again, investors found sanctuary in gold yesterday, as uncertainty over the Greek vote of confidence and the ever arising proverbial hurdles for the debt troubled nation kept the precious metal well supported. Only adding to the storm, US data is not improving, in fact, it’s pointing towards a further slowdown sending investors to the safety of gold as the ultimate hedge in times of troubles. All of this helped the yellow brick edge up 5 and a half bucks, finishing the session at 1544. Now all we need is a close above 1553, the high of June 6th, and the short term trend will revert back to a bullish stance.
As we’ve seen in the last week or so, silver has been trading in a very tight range. Yesterday’s session was no different as silver moved higher, gaining 51 cents to close at 36.38. Even with a short term trend indicating a sideways move, investors still saw the precious metal cross above the short term moving averages, signalling a bullish turn.
With the news that the Greek government survived the crucial vote of confidence, the euro was given a boost yesterday to the intraday high of 1.4434. There was a slight pull back later in trading hours as traders focused on the upcoming austerity vote on June 28th, and then not long after, the decision by the euro zone finance ministers on July 3rd. Could this have been the reason the single currency only gained 16 ticks to 1.4376, actually declining after the vote as momentarily caution beat fear, as well as euphoria.
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