Markets Calm Amid Default Rumours

The Forex
markets were calm in yesterdays trading day as traders and investors alike
attempted to interpret the rumours surrounding a Eurozone bailout package that
started over the weekend. Stories have been popping up about a €1.7 trillion
fund which would be aimed at saving the Eurozone and allow Greece to
default on its £340bn debt pile. This would involve propping up the banks that
have invested in Greek bonds so that a controlled bailout can begin on the
ailing country. Further plans involve recapitalising Europe
with tens of billions of Euros to reassure the markets. UK Chancellor
George Osbourne was forced to issue a hastily drafted statement after a British
Treasury official outlined behind-the-scenes moves allowing a Greek default.
His comments insisted that Greece
does have a recovery plan and must carry it out as he rejected claims that the
G20 would allow a default.

The markets
reacted with the Euro taking a small hit across the board, but also the US
Dollar as some investors hastily moved funds from the so-called “safe haven”
other  instruments. Little volatility has
occurred since then as everyone waits for any more news/rumours surrounding the
main story of the moment. The likelihood of Greece being able to follow its
current plan and rebuild its economy seems unlikely and some sort of default or
write down of their debt seems inevitable.

Report by Tim Lewis