Euro Lower as Greek Aid Package Begins Ratification Process

George Papandreou has his work cut out for him. He faces the IMF and European Union debt cuts proposals and Greek angry voters in a deal nobody wants to make but it appears to be the only solution for the indebted country. A country he just became Prime Minister a few weeks ago and whose shady reporting has led to the current crisis.

Comments from an interview by the German Finance Minister where he mentioned that the aid package to Greece can still be rejected have hit on the hopes of the Greek PM to receive the aid before the country enters into a default to creditors. The problem for Germany is not Greece, but what its default could trigger, likewise does supporting an aid package put them on the hook for more countries requesting a bailout.

The US$ is weaker in the O/N trading session. Currently it is lower against 8 of the most actively traded currencies in a ‘whippy’ trading range. The USD$ is lower against the EUR -0.14%, , GBP +0.62%, CHF +0.08% and higher against JPY -0.10%, The commodity currencies are a stronger this morning, CAD +0.07%% and AUD +0.31%%. The loonie appreciated after the Central Bank dropped its commitment to not move on rates, which signals an upcoming rate increase. The market expects the RBA to increase rates in their next meeting in May this coupled with the positive corporate earnings reports have boosted the AUD as the speculation of economic recovery continues (0.9291).

Forex heatmap

Crude is lower in the O/N session ($85.35 up -23c). US Dollar strength has put downward pressure on oil as an alternative investment, but the optimism surrounding a global economic recovery has boosted the black stuff to above $85. The combination of US Dollar strength and US growth weakness paints a negative picture for crude demand but as equities continue to advance it has improved the forecast as more players enter long positions.

Equities gave Gold a boost after the metal had touched a two week low earlier last week to offset the effects of Goldman and Greece. Inflation signs around the globe have given Gold ($1,156) some of its luster back as an inflation hedge as the USD$ weakens . Palladium continues its climb it reached a new two year record level as there is a growing demand from automakers in China.

The Nikkei closed at 11,165 up +251. The DAX index in Europe was at 6,317 up +57; the FTSE (UK) currently is 5,765 up +41 The early call for the open of key US indices is higher.

Note: Dean will be away traveling for the next two week’s and will return to publication on April 29th.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza