After an all night debate that ended around 10:00am local time, the Greek parliament approved sweeping measures demanded for the third bailout. Germany remains skeptical and the Eurogroup convenes later to discuss.
The same Germany sees its growth figures slightly disappoint. All in all, these important events keep EUR/USD in the balance, hugging the 1.1150 level.
The debate in the Greek parliament exposed an ever growing split within the ruling SYRIZA party. The house speaker and former finance minister stood out in their opposition to the measures. Had it not been for the right-wing opposition parties, the vote would not have passed.
Greek PM Alexis Tsipras has called a vote of confidence and is also reportedly considering fresh elections. Personally, he has no external rivals after the referendum and he needs to reassert his leadership
As we mentioned before, this is not a done deal. Germany would prefer to drag negotiations and agree on another bridge loan rather than a full third bailout. Some want to tighten the screws a bit further and some, like the German finance minister Wolfgang SchÃ¤uble just want to kick Greece out.
But there is also a real issue: the big debt elephant in the room. Germany opposes any debt relief now and agrees only to talk about restructuring after the first review. Agreeing on a bailout means getting the first review closer.
The IMF says Greece’s debt is unsustainable and wants to have some kind of relief in the deal. Otherwise, it will not sign it off.
And Germany wants the IMF in the deal.
Something has to give.
The euro-zone finance ministers (Eurogroup) convene later today to discuss the third bailout deal. As Germany controls the group of 19 ministers, there are growing chances that the contingency plan for a bridge loan will prevail.
With the previous bridge loan, we had the UK involuntarily involved. Will it happen again?
In our later podcast we discuss predictable currencies vs. unpredictable central banks.