The euro has rallied steadily upwards in recent trading as Greece has taken further steps to reduce its public debt and speculators have been put in the hot seat.
Yesterday, Athens announced additional measures to cut into its 12.7% deficit while a massive general strike brought the country to a standstill. The two main labor unions joined forces to protest the government's austerity package.
The Greek government plans to reduce this huge gap by three points come year end.
The Euro-Zone's common currency has now been holding ground for the past month to tick up slightly to the 1.3600 area after free falling from 1.5100 in November to lows under 1.3500. The stabilization of the euro coincides with Greece taking major steps to cut its deficit and the political backing the Greeks have received from their European partners.
A key test for Greece was a recent bond auction which drew better-than-expected investor interest. The problem for the Greeks is that the high interest they will be paying out of the bonds basically cancels out the benefits of the sale.
Greek Prime Minister George Papandreou has said that these levels of interest are unsustainable and has launched an attack on speculators which has received the public backing of German Chancellor Angela Merkel and French President Nicolas Sarkozy.
Still in need of funds, Greece will soon go back to the bond market with hopes of finding more favorable terms this time around.
The financial ministers of the EU-member state will meet next week on March 16 to for the second time to discuss the Greek debt crisis. The market will be all ears.
In-Depth Analysis
- EU Ministers are scheduled to meet on March 16th to discuss the Greek debt issue by ODL Securities
- Portugal: A preliminary take of austerity measures by UniCredit Group
- Debt Concerns and Downbeat Data Are Clouding Economic Recovery in Europe by ecPulse.com
- US Dollar Mixed, Greece Announces New Austerity Measures by Alpari (US), LLC
- Investors assess the global economy outlook, Greece's debt problems by ecPulse.com
- Will the UK Import Greek Austerity? by World First UK Ltd
- Risk ‘On' as Greece Continues to Drum up Support by World First UK Lt
- Greek problems rumble on as Papandreou blames speculators by Mizuho Corporate Bank
- The Week starts with optimism as Papandreou's lobby for support yields results with EU ready to back debt torn Greece by ecPulse.com
- Pain is good…helps build character by RANsquawk
- Greek central bank head Provopoulos says they will not need foreign aid with their debt by Mizuho Corporate Bank
- EUR/USD, USD/JPY Flows - Telegraph: Land of Rising Sun watches as Greek star wanes by FXMarketAlerts
- More positive tone in the credit market by Danske Bank A/S
Related News
- Gold up, Euro uncertainty courses through markets
FXstreet.com - Gold falls as Greek concerns wane
FXstreet.com - EUR gains stall as Greece warns of wider crisis
Forex Live - Portugal joins Greece in slashing deficit
FXstreet.com - Greek central bank chief: no aid needed
Forex Live - EUR slides despite Greek bond sale
Forex Live
Analysts Comments
- The Guardian editorial:
"Clubs that do not hang together end up with the members being hanged separately, and in investors' minds Greece is not so different from Portugal, Italy or Spain: they all go on the target range marked Pigs." - The Guardian - Al Lewis, columnist for Market Watch:
"Hermes - God of trade, commerce and riches. But also a trickster and patron of cunning thieves and liars. Prime Minister George Papandreou uses another word for the folks Hermes watches over: speculators. "Unprincipled speculators are making billions every day by betting on a Greek default," he complained yet again this week. A Greek leader, however, should not forget Hermes is also a messenger, reminding mere mortals that all is not right with the way they are running things." - Market Watch
