Awaiting the
inevitable

Last week an unrelenting belief that Greece will inevitably
receive its third tranche of bailout funds caused the euro to make strong gains
across the board.

Despite a failure to agree on terms after a two-day summit,
investors remained confident that the situation would be resolved, with many
touting today as the day a deal may be announced. As such, the almost certainty
created strong risk appetite aided in part by the seemingly smooth progress
across the pond, resulting in a weak dollar.

Awaiting the
inevitable

Last week an unrelenting belief that Greece will inevitably
receive its third tranche of bailout funds caused the euro to make strong gains
across the board.

Despite a failure to agree on terms after a two-day summit,
investors remained confident that the situation would be resolved, with many
touting today as the day a deal may be announced. As such, the almost certainty
created strong risk appetite aided in part by the seemingly smooth progress
across the pond, resulting in a weak dollar.

Without any hitches so far, discussion within congress
appears to be productive as America tries to sidestep the impending fiscal
cliff. Consequently although fundamental data in Europe didn’t inspire, the
general outlook across Europe remained positive.

Following such strong gains, the case could be that a Greek
bailout is already priced in. Having yearned for the announcement for months,
further gains may be curbed as focus shifts to future obstacles in Europe’s
way.

Poor economic performance dogs the 17-nation euro; whilst
hopes of a Spanish bailout have been dampened as the Catalonian independence
parties won their regional vote, showing defiance to the leadership of Spanish
Prime Minister Rajoy.

Possibly nearing the end of its charge, euro sellers may be
looking to cash in now. Similarly a very weak Indian rupee, faltering as the
nation’s credit rating may be cut to junk status, has prompted a sharp
sell-off, representing an excellent time to buy rupees.

 

Today’s Key
Announcements:

• All Day – EUR – Eurogroup Meetings
• 12.00pm – EUR – German Consumer Climate