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Euro Opens Lower As G7 Fails to Agree on Greece

Last updated 9/19/2011 3:28 AM ET (GMT -5) 0 Comments - Add your comment

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Boris Schlossberg

Director of Currency Research, GFT

Risk FX was under pressure at  the start of week’s trade after the G-7 meeting in  Poland failed to produce any concrete agreement on Greece with the country now only weeks away from possible bankruptcy. The EUR/USD dropped by nearly 150 points testing 1.3650 in late Asian session  trade after closing out in New York last Friday at 1.3800.

Markets remain nervous as the  troika of IMF ECB and EU continues to withhold  the disbursement of the second tranche of bailout funds to Greece seeking further  deficit reduction moves from the country. Greek Prime Minister George Papandreou cancelled a planned visit to the United States to hold an  emergency cabinet meeting yesterday to address the concerns of the European officials.

Today the Greek Finance Minister Evangelos Venizolos will outline a range of austerity measures intended to assure the creditors that the country is on the way towards fiscal consolidation with some reports suggesting the the troika is demanding further reduction in government payrolls to bring the total cuts to  100,000 jobs. Such a move is likely to create further political turmoil for Mr. Papandreou’s government with opposition forces already arguing that the current policy is sending the Greek economy into a tailspin.

With no economic data on the calendar today, the focus will remain squarely on Greece as markets await the results of the conference call between Mr. Venizolos and the troika. The EUR/USD has stabilized at 1.3700 in early morning European trade but If the talks show no meaningful progress is being made the pair could come under further selling pressure as the day proceeds with shorts targeting the 1.3600 figure in North American session.

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About The Author

Boris Schlossberg began his Wall Street trading career more than 20 years ago at Drexel Burhnam Lambert. There, he traded nearly every type of financial product on the market in the U.S., from equities and options to stock index futures and foreign exchange. His innate ability to analyze market information and use it to trade has helped him become an industry-recognized, “go to” trading professional.

These days, whenever the markets move, many organizations turn to Schlossberg for his take on the situation. He is a weekly contributor to CNBC's Squawk Box and a regular commentator for Bloomberg radio and television. His daily currency research is widely quoted by Reuters, Dow Jones and Agence France Presse newswires and appears in numerous newspapers worldwide. Schlossberg has written for publications like SFO magazine, Active Trader and Technical Analysis of Stocks and Commodities. He is also the author of Technical Analysis of the Currency Market and the co-author of Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game with Kathy Lien. He joined GFT in 2008.