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Euro Weaker as Week Opens

Last updated 1/30/2012 3:56 AM ET (GMT -5) 0 Comments - Add your comment

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Boris Schlossberg

Director of Currency Research, GFT

The euro was lower in Asia at the start of week’s trade as the disappointment over the lack of a definitive deal between Greece and private sector investors caused the currency  to slide to 1.3140 from its Friday’s close of 1.3225. Although the reports over the weekend suggested that the two parties were close - agreeing on a 60% haircut and a coupon just below the 4% rate - no formal announcement has yet been made frustrating some market players who had been expecting a deal to be concluded.

Meanwhile Greek Prime Minister  Lucas Papademos said that unless the country’s international backers agreed to a new bail-out, Greece would be unable to pay off its loans and be forced out of the eurozone.

EU leaders will meet in Brussels tonight amid growing concern that Greece be unable to implement the austerity measures demanded by EU as a precondition of the latest package of financial support. Without that bail-out, Greece will be unable to repay €15 billion of loans due in March.

Over the weekend Germany suggested that a European commissioner should take effective control of Greek fiscal policy to ensure that the country implements key austerity measures. However, Evangelos Venizelos, the Greek finance minister, rejected that plan, saying it would undermine Greece’s “national identity and dignity”.

Greece will remain the key focus of trade at the start of the week as market remains uncertain about prospect of a deal. For now 1.3150 remains support as Middle Eastern buyer keep any selloff contained, but any further reports of delay could trigger a more significant downdraft with 1.3100 and even 1.3000 in view on any news of potential failure to arrive at a compromise.    

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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.