A big development in the ongoing Greece 3.0 saga has been the support of US President Barak Obama. According to the Wall Street Journal Mr Obama has 'expressed sympathy for the new Greek government as it seeks to rollback its strict bailout regime, saying there are limits to how far its European creditors can press Athens to repay its while restructuring the economy.' The ideological support of the President of the world's largest economy and pre-eminent financial and military super power cannot help but assist Greece in its attempts to tailor a new solution and new blue-print for its ailing economy. The head of Lazard's Paris Office Matthieu Pigasse made the following Statement on Bloomberg TV,
“There is a range of possible solutions: extending the maturities, lowering interests rates, and the much more radical solution, the haircut. If we could cut the debt by 50 percent” he said, “it would allow Greece to return to a reasonable debt to GDP ratio.”
The Greek economy has contracted by 25% and is suffering 25.8% unemployment while 50% of 16-24 years old are unemployed. The nation's benchmark stock index the ASE has slumped 83.8% and the country has suffered the worst recession of any major European economy in over 20 years. In addition Spain has also experienced its deepest economic recession in its modern history and has an unemployment rate of 24% while Italy the continent's third largest economy has been stagnating and Unemployment has risen above 13%. At this stage Ireland, Greece, Portugal, Spain and Cyprus have entered into a bailout mechanism while Italy and to a lesser extent France may eventually need assistance. The Eurozone GDP has stagnated and the common currency has tumbled to its lowest level in 12 years declining to 1.1097 last week after having traded as high as 1.6030 in 2008.
The main thrust of Greece's new government is based on three pillars i) Debt Restructuring ii) End of the Austerity Program iii) A reversal of the economic reforms to reflect the strengths of the Greek economy. The new government plans to reconsider privatization of potentially valuable national assets such as the National Energy Company according to Greek Finance Minister Yanis Varoufakis. Although changes to the current way of doing things in Europe will not occur without a struggle it does appear that there is required a new economic policy and thrust as Europe stagnates and has an Unemployment Rate of 11.4% vs 5.6% in the US ie more than twice as much unemployment and an unacceptably high ratio .
On Friday US Advance GDP q/q disappointed expectations with a print of 2.6% down from 5.0% and missed forecasts of a 3% rate of gdp growth. Canadian month over month GDP data declined at a rate of -0.2% worse than the -0.1% forecast as the Canadian economy continues to decelerate. The USDCAD hit a new high of 1.2700 rising from 0.94 in July 2011, the CAD is 3100pips and 31 cents weaker than 3 1/2 years ago. Today markets will be digesting Manufacturing PMI data from China, Europe, UK and the US as all are released on the same day. Current price on the EURUSD 1.1315.
EURUSD Support areas include 1.13, 1.12, 1.1150 1.1250, 1.1200, 1.1175, 1.1100, 1.10, 1.0950. Resistance levels above are at 1.14, 1.15, 1.16,1.1650,1.1700, 1.1800, 1.1975, 1.2000, 1.2200, 1.2300, 1.2380, 1.2402.
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