Greece deal a damp squib for the euro

Money markets across the globe saw a somewhat subdued surge overnight, despite the Greece deal having been passed which was offset by concerns over the fast approaching US Fiscal Cliff decisions to be made.
Greece deal a damp squib for the euroWhile most people expected the euro to gain some strength once the bailout deal had been approved, investors remained cautious and the currency failed to break the 1.30 barrier against the greenback as concerns grow on whether the deal will actually help Greece reduce its GDP target from 144% to 120% over the next 8 years or will it force Greece to remain locked in the Eurozone facing further stark austerity measures and low growth.

The first loan instalment of 34.4 billion will be disbursed this December.

Even though the Greek PM Antonio Samaras has issued a statement that it is a reforming move for Greece, most markets are still sceptical whether Greece actually has the tools and the discipline to ensure that further requirements are met.

For now, the only bit of good news for the Eurozone is that they have managed to keep the country as part of the union.

The build up over the meeting saw the euro move to a high of 1.30 against the dollar, but quickly started losing its initial gains and ended up at 1.2930 levels.

Also, the European Stability Mechanism (ESM), a fund setup to help struggling economies, has been approved by the European Court paving the way for other nations like Spain to request aid.

We had unemployment figures from France, which showed that it hit a 14 year high in November increasing unemployment numbers in the country by 45400 bringing the total to 3.1 million people out of work.

We also had a US consumer confidence figure yesterday, the results of which showed that the US economic sentiment has moved to a 4 year high at 73.7 in November.

The currency enjoyed some strength as the Core Durable goods numbers comfortably beat expectations.

However, investors are now beginning to panic, since the talks on the ‘fiscal cliff’ programme have hardly made any progress so far.

Yesterday also witnessed the release of the UK GDP figures, which increased by one percent in the third quarter this year.

Since the figures show an emergence from a double dip recession, the Great British Pound surged to levels over 1.60 against the dollar.

However, with the OECD cutting future growth forecasts from 1.9% to 0.9% for 2013, the Pound has struggled to move beyond the 1.6020 levels, raising concerns that George Osborne will struggle to meet the deficit targets set out.

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