(GR) Greece coalition government expected to be announced later today, coalition to include New Democracy, Pasok and Democratic Left parties – Greek press notes these three parties are currently meeting to form the coalition, with New Democracy’s Samaras as PM.
(ES) Bank of Spain (BOS) was said to have asked auditors to delay their reports in order to conduct a more thorough study. Press reported the central bank asked the four auditors (Deloitte, KPMG, PwC and Ernst & Young) to delay their reports until after the summer instead of by July 31st. The auditors are conducting the second phase of an external overview of Spain’s financial sector.
(G20) G20 draft communique to call for Europe to take all needed measures; if economic conditions deteriorate, nations with fiscal space will take appropriate measure to support demand.
(DE) Germany Constitutional Court ruling on ESM and Fiscal Pact: Lawmakers win bid over gov’t information on ESM; ruling does NOT prevent ESM from taking effect.
How to interpret these headlines?
As I have pointed out before, uncertainty plays a bigger role than negative news… even the most dovish analysts have to admit that situation has improved this week significantly following the positive Greek election results, and European Uncertainty is at absolutely lowest point for the year… This is likely to add further demand for the Euro, which has been a victim ever since the threat of a “Grexit” after previous election. With now positive news that a new coalition government is in the works, market can finally take a moment of relieve. As far as Spain is concerned, the delay of the audit will push the timeline back until after Summer, which will give the market a moment to rest, and absence of bad news is actually good news. In reference to Germany’s rule on ESM and the G20 Communique, both are positive for the Euro as Germany has been making lots of noises about the constitutionality of the ESM lately, but with this ruling, that uncertainty is over as well.
All in all, with the anticipation of QE3 (or some thing similar) from the Feds, I am looking to go LONG on the EURUSD.
Market Recovers As European Uncertainty Wanes…
June 19, 2012 by 2 Comments