French finance minister, Michel Sapin, has said there is a “consensus” with Greece about some of the issues around its bailout program. This is a different tune. Sapin says says that Greece could keep a primary budget surplus of 1.5% for the duration of the program extension. This is a significant concession, and what Greece wanted in the first place. However, the extension of the program seems like a big concession from Greece that wanted it thrown out.
Update 15:35 GMT: Greek crisis: talks in deadlock again – EUR/USD falls to support
EUR/USD is up to 1.1440.
The primary surplus target was 4.5% in the troika program. Greece asked for 1.5% in order to get breathing space. If this is agreed, the euro-zone finance ministers are certainly “blinking” first.
However, some think that an agreement to extend the program consists of a blink from Greece:
Greek gov’t will lose face if it accepts extension of the programme regardless of any Eurogroup concessions. Gov’t hostage of own rhetoric.
“” Yannis Koutsomitis (@YanniKouts) February 17, 2015
What do you think? Who won and who lost? For the euro it does not really matter too much at this moment.
Sapin also says that a solution to a deal is mainly about wording and there is a consensus with Greece on issues such as debt, no haircut.
When talks broke up yesterday, we mentioned it could be a buy opportunity.
Can the pair continue much higher? In the short term, a relief for Greece and a relief from Greek headlines would be euro positive. The crisis has deepened lately and certainly weighed on the euro.
However, in the greater scheme of things, it isn’t only Greece: the divergence in policy matters quite a lot. The ECB is just about to begin it’s big QE program, while the US is set to tighten in 2015. The bigger picture could see another fall in the value of the euro before the European economies further reap the benefits of the weaker euro, grow faster and this will eventually lead to a stronger euro, but that’s not too close.
Opinion: Staying Short EUR/USD Targeting 1.08; Rebuilding Long USD Exposure – BNPP
Here is the move on the chart:
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