As you know, in committee, Greece has passed a watered down version of the austerity measures required by the Troika, this plan actually had a chance to pass Parliament.
The EU's response....
You can find it here.
Sunday, June 19, 2011
The Greek Tragedy Enters a New Scene
On Friday, German Chancellor Angela Merkel and French President Sarzoky apparently came to an agreement with the Germans essentially caving in to demands by the ECB, supported by France with regard to bond holders. This agreement seems to have fallen apart today. Der Spiegel has quoted an unnamed official saying the agreement is now "off the table".
As I mentioned on Friday, it seemed like there had been some coordination between Germany, the ECB and Greece as Greece immediately moved to pass austerity measures in committee which were lacking many of the components that the Troika had demanded. It seems now, there was no such coordination and the Germans pulling the rug from under the agreement reached on Friday, a mere 2 days later, seems to be in reaction to Greece moving forward in changing the austerity measures which were required by the troika, once again throwing any agreement which seemed to be almost a done deal, back to the drawing board.
Finance Ministers from the EU are meeting tonight, but this sudden u-turn by Germany (lacking a credible plan by the ministers tonight) seems like it's going to throw the markets back into disarray.
Watch for extreme volatility in the Euro. Other factors adding volatility to the FX markets this week would include the Frank-Dodd legislation which is apparently being interpreted by many as having profound effects on trading of currencies by hedge funds, it may knock them out of FX trade altogether. There are other ramifications including OTC gold trading.
The FX markets will open shortly and we'll get our first glimpse of what this week's volatility may look like.
I'll be updating the situation later after the FX market's open and if there are any further developments out of the EU finance ministers' meeting.
As I mentioned on Friday, it seemed like there had been some coordination between Germany, the ECB and Greece as Greece immediately moved to pass austerity measures in committee which were lacking many of the components that the Troika had demanded. It seems now, there was no such coordination and the Germans pulling the rug from under the agreement reached on Friday, a mere 2 days later, seems to be in reaction to Greece moving forward in changing the austerity measures which were required by the troika, once again throwing any agreement which seemed to be almost a done deal, back to the drawing board.
Finance Ministers from the EU are meeting tonight, but this sudden u-turn by Germany (lacking a credible plan by the ministers tonight) seems like it's going to throw the markets back into disarray.
Watch for extreme volatility in the Euro. Other factors adding volatility to the FX markets this week would include the Frank-Dodd legislation which is apparently being interpreted by many as having profound effects on trading of currencies by hedge funds, it may knock them out of FX trade altogether. There are other ramifications including OTC gold trading.
The FX markets will open shortly and we'll get our first glimpse of what this week's volatility may look like.
I'll be updating the situation later after the FX market's open and if there are any further developments out of the EU finance ministers' meeting.
