Greece goes to elections after presidential elections fail

Another risk event joins the calendar in Q1 2015: general elections in Greece where the anti-austerity SYRIZA party could win a majority and challenge Germany’s austerity drive.

Greek lawmakers were unable to elect the government’s  presidential candidate. Over 120 members voted “present” and not for the president, thus denying a majority of 180 out of 300 members. The final result is 168:132, just like in the second round.

180 votes were needed to elect a president and prevent general elections. The  previous two attempts resulted in 160 and 168 votes. The presidential elections were  brought forward by Prime Minister Antonis Samaras, in a move that seemed bold at the time but now seems very wrong. He could lose his job.

EUR/USD traded around 1.22  before the publication and seems quite stable after the  results come out. However, the Athens stock market is collapsing.

Greek lawmakers were set to vote in the third and final round of elections for the president. There is only one candidate, Dimas. A failure to approve him as the new  representative head of state triggers elections within 40 days. This comes as Greece  is in the crossroads regarding its bailout program: it is at loggerheads with the international troika of lenders: EU / ECB / IMF.

Greece is better placed now: it has a primary surplus. In addition,  the anti-austerity drive is on the rise: left wing Podemos in Spain and right wing National Front in France are taking votes from mainstream center-right and center-left parties.

A fresh set of elections is expected to see the anti-bailout, anti-austerity SYRIZA party win over the current government led by the mainstream New Democracy party.

A return of the Greek debt crisis is worrying  for the euro, even though the danger of contagion is low and the ECB provides quite a few backstops.

More:  EUR/USD To Fall To 1.12 Without QE Or 1.05 With QE – Morgan Stanley