Interest rates and politics provided most of the entertainment for dealers last week.
The political highlight was the way Greece's new political masters and Euroland's old guard were talking at, but not listening to, one another. With interest rates, the question was whether America's Federal Reserve could raise interest rates while all around are cutting theirs.
Last week brought rate cuts in Australia, Romania and Denmark. Romania's reduction was uncontroversial but the other two raised eyebrows. The Reserve Bank of Australia lowered its Cash Rate from 2.5 per cent to 2.25 per cent and the Danmarks Nationalbank took its benchmark rate down to -0.75 per cent.
The timing of the RBA move was a surprise. The Danish cut was the fourth in three weeks and was intended to further discourage the speculators who think Denmark could follow Switzerland in abandoning its peg to the euro.
Meanwhile in the States, another month of strong employment data kept alive the idea that the Fed could still be on course for a rate increase this summer.
As for Euroland, the early view was that the new Greek government would be reasonable in its debt-relief negotiations with the EU. That changed as the week wore on, first when the European Central Bank cancelled Greek banks' access to cheap liquidity and then when the German finance minister offered no concessions to his Greek counterpart.
By the weekend the Greek prime minister was spitting pips, having twice been blanked by the EU. He delivered a defiant speech in parliament, sticking to his manifesto promises to ease austerity and create jobs.
If both sides stick to their guns, the stage could be set for Greece's exit from the euro by the end of this month. Anyone with bank deposits in Greece should be asking themselves if there might be a safer place to park their money.
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