Euro Complacent after European Troika Releases Draft
THE TAKEAWAY: [European Troika Releases Draft ] > [More Harsh Austerity on Greece] > [EUR/USD Neutral]
After days of intense negotiations, the European Troika finally released their draft of what they are demanding of Greece, in order for the country to receive additional bailout funds. European officials have noted that if a deal isn’t agreed upon and approved by February 15 by Greece, the Euro-zone, the European Central Bank, and the International Monetary Fund, there isn’t enough time to complete the legal process that would prevent a Greek default on March 20, the date of a bond redemption for Greece.
Some of the notes and proposed measures from the Troika’s draft include:
- Greek 2012 gross domestic product to shrink as much as 5 percent
- Greece pledges 15,000 state job cuts in 2012
- Greece will return to growth in 2013
- 20 percent cut in minimum wage
- No increase in sales-tax
- Accelerated labor, product market reforms
- Cut medicine spending to 1.5 percent of GDP from 1.9%
- Greece aims to sell DEPA, DESFA, OPAP, EYDAP, and EYATH in first-half of 2012
EUR/USD 1-minute Chart: February 8, 2012
Charts created using Marketscope– Prepared by Christopher Vecchio
In reaction to the news, the Euro failed to gain any traction versus the U.S. Dollar, gaining a mere 2-pips following the release of the draft. Market participants have seemingly priced in the resolution of this event, considering that the EUR/USD has rallied 4.99 percent since January 16. At the time this report was written, the EUR/USD was holding steady at 1.3261.
--- Written by Christopher Vecchio, Currency Analyst
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