The EUR/USD moved higher on Tuesday, Feb. 3, after Bloomberg reported on the latest developments between Germany and Greece.
Syriza won 141 of 300 parliament seats in the last Greek election, which resulted in Alex Tsipras ascending to the position of prime minister for the troubled European nation. The new head of state, who campaigned on an anti-austerity platform, has helped provoke concerns that Greece will leave the eurozone instead of continuing to be part of agreements that involve accepting austerity cuts for bailout funding.
Germany has begun discussions with Greece, exploring the possibility of new financial agreements between the country and the key players in the region. Germany expects that its existing negotiations with Greece will continue after the current round of bailout funding runs out at the end of February, and is willing to wait until April or May – when the nation will near a cash crunch – a person familiar with the matter told Bloomberg.
While Greece previously made some bold demands, it has since taken a somewhat softer approach, the media outlet reported. A week after being installed into his new position, Tsipras has yielded to widespread opposition from other parties in the region. While the nation originally asked that the eurozone write down its debt, Greece has shifted gears and suggested swapping existing debt for new bonds that are tied to the country’s growth.
Finance Minister Yanis Varoufakis consoled investors on Monday, stating in London that privately held bonds would not incur losses, according to Reuters. Later that same day, he issued a statement indicating that observers had misconstrued the comments he made to investors. He failed to provide further clarification, but the Greek media widely reported that he was no longer supporting the Greek government’s previous desire to reduce its debt load.
Thus far, nobody from the German chancellery has met with Tsipras, but Angela Merkel, chancellor of Europe’s largest economy, is currently taking a hard line with Greece’s new prime minister and wants to avoid entering a dual with him, a separate official told Bloomberg. The individual indicated that she is still attempting to figure out exactly what Tsipras intends to do.
“The Greek government is still working on its position,” Merkel said Feb. 3 in Berlin, the media outlet reported. “That’s more than understandable considering the government has been in office for a few days. We’re waiting for recommendations and then we’ll go into talks.”
While Germany’s chancellor figures out her approach, Tsipras and Varoufakis have scheduled meetings across Europe in an attempt to drum up support, according to the news source. The pair visited Rome Tuesday. Greece’s new prime minister planned to travel to Brussels and Paris next.
Regardless of what allies Tsipras generates, he may face significant difficulties in making good on his promises, which include ending public-sector firings, bolstering wages and pensions and ceasing sales of assets.
Amid this uncertain situation, market participants interested in forex trading might benefit substantially from staying informed about the latest developments. Being aware of this information might help them make better-informed decisions.