Euro Assets In Sell Signal

Investors sold risk assets like the euro, oil and stocks on Tuesday as Greece’s commitment to bailout pledges was put into question, adding to concerns over a possible Franco-German split on policies to tackle the region’s debt crisis.

The results of elections in Greece and France, in which voters soundly rejected austerity measures, heightened the uncertainty of the path ahead for the euro zone debt crisis.

Most European equity markets fell and Wall Street, which showed resilience on Monday, dropped in early trading.

Greek voters on Sunday punished the two mainstream parties for supporting the austerity conditions of a bailout. Alexis Tsipras, the leader of the Left Coalition party, said on T uesday Greece’s commitment to an EU/IMF rescue deal has become null since the elections.

Tsipras, who was given a mandate on Tuesday to form a government after his party came in second, said banks should come under state control and called for an international commission to investigate whether Greece’s debt is legal.

The euro was down 0.4 percent at $1.3006, off the previous day’s low of $1.2955, but briefly traded below $1.30 for a second straight day.

“The euro reacted to the Greece headlines, but the move lower has faded a bit because what (Tsipras) said was not so unexpected,” said Camilla Sutton, chief currency strategist at Scotia Capital in Toronto.

Reuters

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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell