Week in FX Europe – Greek Debt Deal Reached as Eurogroup Budget looms

Last week saw the Eurozone as one of the only major economies to be online as holidays reduced the Japanese and American working week. China manufacturing was the main factor boosting the EUR last week even as the Greece debt agreement and Eurogroup budgets failed to reach a conclusion. This week saw at least one of those major European agenda items get sorted.

The EU has agreed to unblock Greek debt bailout package 40 billion euros and a 20 percent haircut. This brings much needed relief to the Greek people. The final compromise was based on IMF figures of sustainable debt levels and timeline to repay. There are still rumblings that some parts of the agreement were political compromises meant to avoid the debt haircut to be accounted in such a way, as certain members preferred a rate discount and extended payment deadline instead of a reduced principal amount.

The European budget meetings will probably be pushed to the new year as countries as Germany and UK are too far apart from France and Poland in certain subsidies. Angela Merkel’s and David Cameron’s governments are asking for deeper cuts in order to reduce overall EU deficits, but have met resistance from other members. The rhetoric has been diplomatic and friendly from both sides, but the stalemate continues.

EURUSD



GBPUSD

 

WEEK AHEAD

  • USD ISM Manufacturing
  • AUD Reserve Bank of Australia Rate Decision
  • EUR Euro-Zone Producer Price Index
  • CAD Bank of Canada Rate Decision
  • AUD Gross Domestic Product
  • NZD Reserve Bank of New Zealand Rate Decision
  • EUR Euro-Zone GDP
  • GBP Bank of England Rate Decision
  • EUR European Central Bank Rate Decision
  • USD Change in Non-farm Payrolls
  • USD U. of Michigan Confidence

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
Alfonso Esparza

Latest posts by Alfonso Esparza (see all)