With a successful round of bond auctions in Spain and the Euro zone narrowly escaping recession there is plenty to remain hopeful for with Euro exchange rates. Unfortunately the Greece problem is currently being viewed by many as the barometer of the single currency and its potency on the currency market. Many including business secretary for the UK (Vince Cable) are strongly of the belief that a Greek exit would not be the end of the Single Currency due to the ‘firewalls’ or defense mechanisms that would activate on a theoretical departure. It is nonetheless an exceedingly important questions investors face.
In my personal opinion it is speculation that is driving any surplus and affecting outbound Euro exchange rates. Greece, for instance represents only around 2% of the Euro zone’s economy yet is seen as the be-all and end-all of future EU stability . In a previous report it had been mentioned that we are only as strong as our weakest link and it seems a like a good opportunity to reiterate this. The IMF have limited resources and funding to allocate, and whilst global investors would be forced to ask “who is next?” we are giving other wailing states and the Single Currency the best chance to survive in the long term by channeling much needed funds elsewhere.
Whatever happens with Greece there will certainly be both buying and selling opportunities on the Euro against several currency pairs in the coming days and weeks so make sure you strike while the iron is hot and speak to your currency broker today. With the abundance of uncertainty surrounding the European Union it pays to keep up to date with the markets and emerging data releases. With clients currently favoring the forward contract on Euro sell-backs make feel free to request further information on firstname.lastname@example.org.