Greece approves the reforms required but the #Troika cheque not posted yet – 16th July 2015

As widely expected (and with little alternative) the parliament in Athens begrudgingly approved the tax and pension changes that are a condition of receiving a further bailout. It isn’t quite a done deal yet though as Germany and Finland must now legislate to approve the payout. Interestingly, this morning the German finance minister hinted that Germany would oppose debt relief for Greece as long as the country remained within the Euro.

Despite the relief that Greece’s government has bitten the bullet the Euro has been on the back foot, losing out to the US Dollar and Sterling over the last 24 hours. It was the US Dollar that was yesterday’s top performer followed closely by Sterling. It is the pound that is the runaway leader though over the last week, month, three months and six months.

The NZ Dollar though hasn’t done very well at all over the last day, week, month, three months and six months. In fact, since the January it has fallen by 24% – 46 cents – against Sterling. Six and a half of those cents disappeared in the last 24 hours as the Kiwi took a triple blow. Firstly, there was a lower-than expected first quarter inflation reading followed by US Federal Reserve chairperson telling Congress that she still expects an interest rate increase this year. Then came the news that the Bank of Canada has lowered interest rates from 0.75% to 0.5%, reminding investors that the Reserve Bank of New Zealand might itself be contemplating another cut.

The actions by the Bank of Canada saw the Canadian Dollar fall two and three quarter cents on the day, enabling Sterling to reach a seven-year high at 2.0258.

Today the European Central Bank will meet to consider renewing Emergency Liquidity Assistance for the Greek banks. Whatever it decides, Greece’s capital controls are expected to remain in place for some time so there is every chance that Greek banks will remain closed for the rest of the month.

Whilst investors’ resilience to the Greek situation has been well-documented there is a sense that their nonchalance is being challenged by the utter lack of coherence in the troika’s handling of this latest crisis. It would be no surprise to see Sterling move higher against the Euro.