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Euro Falls as Markets Await Deadline on Greek Deal

Last updated 2/6/2012 3:29 AM ET (GMT -5) 0 Comments - Add your comment

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Boris Schlossberg

Director of Currency Research, GFT

Euro was lower in Asian and early European trade today as officials failed to reach an agreement on Greek bailout package for the third weekend in the row and deadline of 10GMT loomed on the market.  According to reports Greece has come to terms with  private creditors but is refusing to implement further austerity measures required by the troika.

Some of the reforms required by the troika include 25% cut in private sector pay, 35% cull in supplementary pensions and closure of more than 100 public sector run companies which would no doubt lead to thousands of more job losses.  The New Democratic party leader  Antonis Samaras stated that “They are asking for more recession than the country can take.”

The draconian cuts required by EU, ECB and the IMF may be politically unfeasible in Greece. A recent poll has shown 92% disapproval rating regarding the negotiations on the bailout with Greece’s two biggest unions set to hold 24 hour strike on Tuesday.

The EUR/USD has remained relatively steady ahead of the negotiating  deadline, but a failure to reach a deal will very likely trigger a fall through the key 1.3000 support and could precipitate a much larger wave of selling if the deadlock appears to be unsolvable.  The situation will then enter into uncharted territory  as Greece will face the prospect of hard default opening up the risk of massive counter party losses.     

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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.