Euro: Good news for Greece this weekend, French premier Nicholas Sarkozy has stated he would work to support the Greeks and assist should the need arise. In a statement to EU leaders, Sarkozy added that “whilst Greece doesn’t need assistance right now, we have the measures, we are ready, we are determined”. Clearly positive news for the Eurozone and the ailing southern states who have until now, looked for a route out of this downturn without turning to fellow EU members. Greece’s Papandreou has also become more vocal about his contempt for speculators, talking this weekend about the market in CDS (Credit Default Swaps, a form of insurance for bonds). In conjunction with Bernanke in the US, the EU is looking to introduce measures that may curb excessive, and thus detrimental, trading in these obscure derivatives. All of this news is positive for the Euro, and we open at 1.3690 and 0.9020 against the dollar and the pound respectively. It is likely that further positive news from Greece and the EU regarding fiscal support will support the Euro in the short to medium term. In other news, Germany’s finance minister Wolfgang Schaeuble has indicated that his government is already thinking of possible alternatives to helping a failing state, and talk of setting up an IMF style European monetary fund will buoy the 16 member single currency.
- We expect a range today in the GBP/EUR rate of 1.1050 to 1.1160
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