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23 Jun 2015
EUR downside limited in the short term – BTMU
FXStreet (Edinburgh) - Currency Analyst at BTMU Lee Hardman has noted that a EU-Greece deal could somehow limit the decline in the EUR, although in the longer run it is expected to resume.
Key Quotes
“The positive financial market reaction to the increased likelihood of a deal being reached was more evident in the European equity and government bond markets. In contrast the euro continues to remain relatively unaffected by ongoing developments regarding Greece. The euro attempted to stage an initial relief rally yesterday but it proved short-lived”.
“An agreement to extend short-term financing to Greece would reduce the immediate risk of Greek default and potential negative spill overs for the euro-zone as whole. It would buy some more time to negotiate a more comprehensive third bail-out package for Greece including debt relief”.
“The risk of a sharper euro decline in the near-term would be reduced. However, it is also likely that relative fundamentals including diverging monetary policy between the ECB and the Fed will begin to reassert themselves as the primary driver of euro direction which still argue in favour of a weaker euro”.
Key Quotes
“The positive financial market reaction to the increased likelihood of a deal being reached was more evident in the European equity and government bond markets. In contrast the euro continues to remain relatively unaffected by ongoing developments regarding Greece. The euro attempted to stage an initial relief rally yesterday but it proved short-lived”.
“An agreement to extend short-term financing to Greece would reduce the immediate risk of Greek default and potential negative spill overs for the euro-zone as whole. It would buy some more time to negotiate a more comprehensive third bail-out package for Greece including debt relief”.
“The risk of a sharper euro decline in the near-term would be reduced. However, it is also likely that relative fundamentals including diverging monetary policy between the ECB and the Fed will begin to reassert themselves as the primary driver of euro direction which still argue in favour of a weaker euro”.