Some details are coming out of the EU Summit. These are good enough to get EUR/USD back to the previous range, but not satisfying for a convincing breakout.
EUR/USD is at 1.3905, back in the 1.39 to 1.3950 range.
- Bank recapitalization: As expected, around 100-110 billion according to 9% core capital. No surprise.
- EFSF leverage: The bailout fund will probably reach the very round number of 1 trillion euros. Also this isn’t a big surprise. The details that will emerge about the mechanism can be complicated. A 2 trillion fund would have been more convincing.
- Greek haircut: Apparently the leaders will meet with the bankers. Can they strike a deal? In any case, a haircut will involve only the private sector and not the official sector. So it’s important to remember that a 50-60% haircut doesn’t mean a reduction of 50%-60% of Greek debt.