The property tax suggested by the Greek government probably worked out well for them: the upcoming tranche of aid will likely be approved for Greece, saving the country from default in October.
While this move isn’t very popular in Greece, EUR/USD is pushing higher, leaving the gap behind for now.
The likely approval of the 8 billion euros of aid was reported in the Wall Street Journal, and also echoed by ECB president Jean-Claude Trichet during his speech in Basel.
Germany’s finance minister Wolfgang Scheauble threatened to disapprove the next tranche of aid if Greece doesn’t fulfill its commitments. This followed the quick departure of the EU / IMF delegation.
The property tax presented by Evangelos Venizelos, Greece’s finance minister is expected to provide 2 billion euros to the debt laden country’s coffers, allowing it to fulfill its obligations according to the bailout program.
EUR/USD managed to move above resistance at 1.3630, and managed to jump above Friday’s close around 1.3650. The next significant resistance is at 1.3750.
For more on EUR/USD, see the euro/dollar forecast.
It’s important to note that there is strong resistance among the Greek people for more austerity moves. The speech of the Greek Prime Minister on Saturday in Thessaloniki required a heavy presence of security forces.
This property tax will range between 50 euro cents to 10 euros per square meter, depending on various social factors. Collection will be made through the electricity bills, to prevent tax evasion.
Will the Greek people stop paying electricity bills?
If this tranche is approved, the next crisis will evolve around the next inspection in December. According to a senior IMF economist, the chances for a default until year’s end are high.
Even without an immediate Greek default, the European banks are struggling, with share prices going in one direction: down.Get the 5 most predictable currency pairs