Greece are keen to hold onto their sovereignty and Germany are fighting to ensure Athens follows through on its promises.
Sterling / Euro and US Dollar exchange rates
Some children in England are spending their time at school preoccupied with ‘finding a home’ rather than learning their times tables or how to spell. The government’s benefit cap scheme has left many primary school children on the brink of homelessness and it is disrupting their education, say teachers. In Greece, education has also been disrupted; hooded youths in masks stormed the University this week, they turned the Law Library into a bomb factory to vent their frustrations at the increasingly tough austerity measures being forced upon their country.
The deficit-reduction plans are considerably harsher in Greece than in Westminster, but optimism has grown this morning (among politicians, not the hooded youths) that Greece may have finally done enough to secure a second bail-out fund. Greek officials claim to have met all of the criteria asked of them by the eurogroup of Eurozone finance ministers. The final €330 million of cuts are set to come from defence (€100m), bringing forward of wage reductions (€90m), and the health and labour ministries (€135m).
The Euro to US Dollar Exchange Rate rallied back up to 1.316 (10:09 GMT) this morning on the back of the developments in Athens. The growth came after 5 straight days of decline for the currency pair. The Pound to Euro Exchange Rate has remained above the 1.2 mark at 1.204 (10:15 GMT) this morning, as the rise in risk sentiment has left Sterling relatively well bid. The Pound to US Dollar Exchange Rate has grown by 0.30% to 1.584 (10:18 GMT) with the safe haven Buck declining on risk sentiment – as is so often the case.
German PMI for January improved by 0.6% in January after a negative growth of -0.4% in December, the European Monetary Union’s Current Account also rose from negative to positive with December’s €-0.9 billion deficit turning into a €2.0 billion surplus in January. But these minor economical improvements will only bear fruit for the Euro if Greece can convince investors that they are fully committed to the bail-out terms.
Antonis Samaras, leader of Greece’s conservative New Democracy party and favourite to win the next set of Greek elections has been quoted this week suggesting that Greece will abandon the strict austerity measures as soon as IMF/Eurozone-appointed Lucas Papademos is out of office. However he spoke to reporters today with a far more consenting tone: “There is no certainty but there is cautious optimism,” and the fact that Greece is claiming to have met all of the Troika’s demands suggests Samaras is now firmly on side.
So today’s headline suggests peace and parity for the Eurozone; disaster averted; Greece will not default. But this has been said many times before, and there is still the hurdle of Private Sector Involvement to deal with – reports suggest that they are now willing to take a 70% haircut on the real value of their bonds – contrasting reports have suggested that the ECB will be swapping its existing bonds for new issue notes. If the ECB help restructure Greek debt then it could force the Private Sector into the same deal; if the debt swap became mandatory it would then trigger credit default swaps.
Greece are keen to hold onto their sovereignty and Germany are fighting to ensure Athens follows through on its promises; German Finance Minister Wolfgang Schaeuble has described Greece as a “bottomless pit” and Greek Public Order Minister Christos Papoutis, responded that Eurozone involvement has now amounted to “sheer blackmail.” Deep rooted differences of opinion like this along with heavily contrasting political views and fiscal policies will need to be consolidated if Greece are to re-settle into the Eurozone in the long-term. If Greece avoid default it is great news for the Eurozone in the short-term, but the long running issues will continue to weigh down on the single currency unless big changes are enacted.
EU 07:00 – German Producer Price Index (January)
UK 09:30 – Retail Sales (January)
CA 12:00 – Canadian Consumer Price Index (December)
US 13:30 – Consumer Price Index (January)
US 15:00 – Leading Indicators (January)
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- Pound Sterling, the Euro and US Dollar exchange rate forecast – The Pound actually rallied against the Euro for the first time in six trading days
- Pound Sterling, the Euro and US Dollar exchange rate news – The Pound rallied strongly against the Euro exchange rate
- The Pound is trading slightly down from yesterday at 1.208 against the Euro exchange rate