Yesterday Eurozone leaders met in Brussels at an emergency summit to try and resolve the situation in what was called ‘the most critical moment in the history of the Eurozone’.
Greece has been given 48 hours to produce their new proposals and Donald Tusk (Eurozone Council President) said “the final deadline ends this week”. If a deal isn’t struck the only outcome will be for Greece to go bust.
Greek Prime Minister Alexis Tsipras has promised they will submit new economic reforms and proposals before the deadline and on Sunday all 28 members of the EU will be meeting to discuss the new proposals and in one way or the other put the whole situation to bed.
The Greek Crisis is providing an excellent opportunity to buy Euros but the real question is for how long will it last?
It seems to me as if its ‘crunch time’ for the Greeks and essential that talks with their creditors show signs of progressing soon. The last time negotiations seemed to be making progress GBP/EUR dropped 6 cents in 7 days! Meaning a €100,000 purchase became more than £3,000 more expensive.
With GBP/EUR at 1.39, what you have to ask yourself is, are you really willing to take a gamble on it getting better? The losses would be considerable and the gains would be minimal.
I feel inclined to highlight the possibility that the markets may have already factored in the risk of a ‘Grexit’, effectively meaning that those holding out for a small improvement may be left disappointed when the rate doesn’t actually improve by much at all.
On the other hand any kind of resolve or agreement in the next 48 hours between Greece’s finance ministers and its creditors on Sunday will encourage the Euro to strengthen and with this week being in my opinion, the most important of them all I am in no doubt that whatever the outcome is, it’s going to be soon and it’s going to encourage violent swings in the currency markets.
You can currently buy all of your Euros today by paying a small 10% deposit and locking in a rate for up to one year, limiting your exposure to the movements we are likely to see.
The Dollar has benefited significantly from the ongoing crisis in Greece as investors look to increase their holdings of the safe haven currency. In times of uncertainty the USD is used by investors to protect themselves from volatility and uncertainty elsewhere.
Sterling has fallen against the Dollar by 2 cents as the crisis continues and analysts are expecting the Dollar to gain even further momentum.
Concerns have now been voiced by the IMF regarding the detrimental affect a strong Dollar will have on US growth and whilst the FED is on a path to raise interest rates it still seems unlikely the Dollar will weaken anytime soon.
Those with Dollar based requirements should keep an eye on the FOMC minutes this evening which may give us a clearer picture as to when they may adjust interest rates.
With the situation in Greece weighing down on ‘riskier’ currencies such as the Australian Dollar and a recent fall in commodity prices, Sterling has managed to touch on a 6 year high against the Australian Dollar providing an excellent buying opportunity for anyone looking to purchase AUD this week.
In other news on Monday night The RBA (Reserve Bank of Australia) voted to keep their interest rates on hold at a record low of 2.00%.
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