Rescue package agreed for Greece

Currencies Direct March 26th 2010 - < 1 minute read

Finally we have an official deal on Greece so surely we have seen a surge of confidence in the markets and a rally in the euro….err not quite. The package will be for about Euro 30 billion with about 1/3rd coming from the IMF and the rest in the form of bilateral loans from the other 15 Euro zone members. Although the euro has bounced higher it has so far been a deflated bounce up against the USD from 1.3270 last night to 1.3385. The agreement was welcomed after weeks of debate and wrangling, however news of IMF involvement was not considered good news for the euro especially after ECB President Trichet commented that IMF involvement would be “very, very bad”. Greece will be aided on a fall back basis in the event that Greece cannot get suitable financing from the markets; however for assistance to be ratified it will require a unanimous decision from EU members after strong conditions have been met. Thus we still have the potential for red tape and dispute when Greece would need direct assistance- this uncertainty could yet serve to undermine the euro further.

Sterling is looking flat again after a nice bounce in the aftermath of yesterdays retail sales data. The news that Conservatives and Labour were running neck and neck in the latest polls and press reports of a 4 day national rail strike next month put the skids under the Pound in the Far East and leaves it vulnerable to further downside on any Euro profit taking. The Dollar, meanwhile, remains the beneficiary of the uncertainty although there does appear to be a move up in risk appetite.

Have a good weekend and remember the clocks go forward…

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