Greek Credit Default Swaps Hit an All Time High

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EUR/USD: Greece’s credit default swaps (insurance against the country defaulting) rose to a record high overnight as the indebted country announced that it will sell some of its islands including Nafsika and parts of Mykonos. This decision trails recent plans to sell stakes in water and railway companies in order raise about 3 billion euros to repair its ballooning debts. Policy makers are trying to do everything in their power to trim their deficit and restore confidence in the euro, however, will it be enough? Greece has taken the first tranche of the nearly $1 trillion life line awarded by the EU , and is currently cutting pensions and wages in the region.  Meanwhile, during the European trade, ECB’s Nowotny said that stress test should not be “overestimated,” and went onto add that it is “important” to curb “debt dynamic.”With reference to the Greek crisis,  the governing council member said that Greece has taken the “right measures.” With reference to interest rates, investors are weighing in a zero percent chance that the European Central Bank will hike borrowing costs twenty five basis points at its next rate decision meeting on July 8th, according to the  Credit Suisse Overnight index swaps. Market participants are pricing in this percentage as it slowly becomes evident that the 16-member euro area may face yet another downturn at the end of the year as governments begin to scale back stimulus measures in order to battle boiling budget deficits. To discuss this and other topics, please visit the EUR/USD forum.


Written by Michael Wright, Currency Analyst
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Michael Wright is the author of FX Headlines, Fundamentals vs. Technical’s, Weekly Spotlight, and Forex Trading Weekly Forecast