MARKET UPDATE: Tarnishing the Euro’s Good Name

 Market participants openly wondering whether recent fiscal troubles are the start of the end of the European project
 The EUR reacted positively to news that some form of support package is being considered (from France and Germany) but nothing concrete has appeared yet, leaving markets on edge

MARKET UPDATE: The Euro comes under pressure

 The EUR continues to struggle both due to the direct and indirect impact of Greece’s fiscal problems
 Indirectly, the EUR dropped sharply following the release of the below consensus German ZEW survey
 Directly, concerns about the seriousness and/or ability of Greece to solve its problems are also weighing on the currency
 Officials at the Ecofin meeting of European finance ministers noted that Greece would not receive help from its neighbours but said its problems are a concern for all of the Eurozone
 The strength of the EUR was also discussed at the Ecofin meeting, with the EU’s Juncker stating that it should better represent European interests
 EUR/USD looks especially vulnerable below its 200-day moving average around 1.4298, the first time it has traded below the 200 day moving average since May 2009

These are the salient points kindly contributed by Mitul Kotecha, MD & Head of Global Currency Strategy at Calyon. To view the full discussion, please click here to visit the original post on his website The Econometer

MARKET UPDATE: A Greek Tradgedy

• Greece announces a three-year plan to reduce rising fiscal deficit. However this failed to convince the markets, as Greece’s 5-year CDS widened to 333bps whilst 10-year sovereign spreads widened further.
• The plan proposes to reduce the budget deficit from 12.7% to 2.8% of GDP by the end of 2012, which many view as unrealistic.
• Greece’s deficit is planned to be cut by 4% this year alone; a tall order given the likelihood that the economy will contract this year.