Greece deal a damp squib for the Euro

Stocks across the globe saw a
somewhat subdued surge overnight, despite the Greece deal having
been passed which was offset by concerns over the fast approaching
US Fiscal Cliff decisions to be made. While most people expected
the Euro to gain some strength once the bailout deal had been
approved, investors remained cautious and the currency failed to
break the 1.30 barrier against the greenback as concerns grow on
whether the deal will actually help Greece reduce its GDP target
from 144% to 120% over the next 8 years or will it force Greece to
remain locked in the Eurozone facing further stark austerity
measures and low growth. The first loan instalment of 34.4 billion
will be disbursed this December. Even though the Greek PM Antonio
Samaras has issued a statement that it is a reforming move for
Greece, most markets are still sceptical whether Greece actually
has the tools and the discipline to ensure that further
requirements are met. For now, the only bit of good news for the
Eurozone is that they have managed to keep the country as part of
the union. The build up over the meeting saw the Euro move to a
high of 1.30 against the dollar, but quickly started losing its
initial gains and ended up at 1.2930 levels. Also, the European
Stability Mechanism (ESM), a fund setup to help struggling
economies, has been approved by the European Court paving the way
for other nations like Spain to request aid. We had unemployment
figures from France, which showed that it hit a 14 year high in
November increasing unemployment numbers in the country by 45400
bringing the total to 3.1 million people out of work. 

We also had a US consumer
confidence figure yesterday, the results of which showed that the
US economic sentiment has moved to a 4 year high at 73.7 in
November. The currency enjoyed some strength as the Core Durable
goods numbers comfortably beat expectations. However, investors are
now beginning to panic, since the talks on the ‘fiscal cliff’
programme have hardly made any progress so far.

Yesterday also witnessed the
release of the UK GDP figures, which increased by one percent in
the third quarter this year. Since the figures show an emergence
from a double dip recession, the Great British Pound surged to
levels over 1.60 against the dollar. However, with the OECD cutting
future growth forecasts from 1.9% to 0.9% for 2013, the pound has
struggled to move beyond the 1.6020 levels, raising concerns that
George Osborne will struggle to meet the deficit targets set
out.