Greece Bailout Continues…
The ECOFIN meeting today ended with no visible agreement to release the €32B tranche of bailout payment, crushing the hopes of Greek politicians who are utterly aware of the €5B redemption deadline this Friday. Furthermore, ECB added fuel to the fire by denying that it would broaden collateral for Greece ELA, a move that shocked the market as traders were counting on the ECB to step in and save the day, just as before in an eerily similar fashion. Euro faced more selling pressure as European officials denied earlier reports that there would be another Greece-specific meeting later this week, although Greece Finance Minister Stournaras said he was “certain the IMF and eurozone will find the way to finalize aid” by November 26th following the Troika report on November 17th.
IMF’s Lagarde, on the other hand, was not as optimistic, even though she praised political progress in Greek parliaments but also acknowledged disagreements with European Commission on the on proper measures for Greek debt sustainability, which has implications that would jeopardise IMF’s participation in future Greek aid. EU’s Juncker, who presided today’s meeting, commented that he was confident Greece will be able to meet the €5B debt redemption and granted Greece 2 more years to achieve the 120% debt/GDP fiscal target.
Greece, on the back of these mixed signals from IMF, EU, and ECB, was able to raise a total of €4.06B in 4-WEEK and 13-WEEK BILLS today, which for the very least provided hope that they may yet raise enough money to wait out until to get paid sometimes in the next 2 weeks, hopefully.
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I guess it is political suicide to give in, or to appear to give in to Greece, bailout after bailout, and still hope to get re-elected. This increasingly tough stance by the European Commission is definitely not doing any favors for the Euro, but ultimately I believe EUR should bounce back as Greece should get paid in the next couple of weeks, especially considering that the worst is over, now that both budget and austerity were passed, with Troika’s blessings, and what’s left are the political posturing and then the inevitable approval of the €32B payment.
I believe EURUSD may still remain under pressure, but the key is timing. I believe now may be a SELL on rally, but after the approval, we should BUY on dips, especially at support areas. As I said, timing is everything.
Greece Bailout Woes Continue To Fuel Risk Aversion
November 13, 2012 by Leave a Comment