The Euros woes continue this morning as Greece has failed to complete a deal with private bond holders over the weekend. European Finance Ministers are meeting today to try and resolve the Greek situation and tackle the regions debt crisis. The Euro opened substantially lower overnight at 1.2860 against the USD and 1.2070 against GBP. This shift lower was short lived as investors are sceptical about the single currency weakening much further in the very short term and some appetite for risk returns to the market.
News this morning is that private investors had made their final offer to Greece which is believed to be a 70% cut in the value of their bonds and are unwilling to go any further. Europe will be desperate for Greece to avoid a default and this may heighten calls for the single currency to be broken up. With very little data released today all eyes will be on the meeting of European Finance ministers in Brussels and the outcome for Greece. I can only assume that markets are feeling confident of the outcome of today’s meeting for Greece based on the overnight and morning moves in the Euro.
We still firmly believe that Europe’s problems are far from over and that a weaker Euro is on the cards. I would expect to see EUR/USD move back down to the 1.28’s this week and GBP/EUR push a little higher but the move much lower for EUR/USD looks like it will be both slow and drawn out.
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