Greece et al, Losing Support, Contagion Fears Continue to Weigh on EUR

The Euro has been sinking against its major counterparts since June 2011 on EU leaders’ inability to solve the debt crisis. The markets’ focus is back on Greece again as the time runs out. The Greek Finance minister Yannis Stournaras, could not accomplish anything at all during negotiations with the Eurozone. The new Greek government is dependent to bailout payments to keep its finances from collapsing. However, the country fails to convince their creditors to give some extra time. Greece and other debt plagued countries are losing ever more support. According to the latest poll, 61% of Germans reject giving Greece and other bailed out countries more time to solve their problems, adding that they have had enough of the broken promises. According to another poll, 58% of Germans want their Deutsche Mark back, up from 39% in 2010.
Greek finance minister, Yannis Stournaras was trying to renegotiate the structural reforms that the prior government had agreed to in writing by signing the bailout memorandum, and push for a two-year delay of these modified conditions. But Germany did not give him what he wanted. German Chancellor Angela Merkel’s spokesman Steffen Seibert said “Neither the content nor the time frame of the memorandum is up for debate”. Bundesbank President Jens Weidmann said “Stretching the timeline for the country’s economic overhaul under the conditions of its two bailouts won’t increase the political acceptance of the austerity measures”.
There are rumors that the Troika (the European Central Bank, the International Monetary Fund and the EU Commission) inspectors finished their preliminary report. The seeped out report shows that 210 of the 300 specific measures to be implemented by now were completely ignored. If the Troika decides not to send the next bailout tranche to Greece, the country will have to default and most likely exit the eurozone.
Meanwhile, the latest Commitments of Traders report released by the Commodity Futures Trading Commission (CFTC) showed that speculative traders increased their open short EUR position by 10% from a week earlier to reach a net of $25.4 billion. CFTC’s data also showed that traders decreased their open short CHF position by 10% from a week earlier to reach a net of $2.2 billion. They also increased their open long JPY position by 115% to reach a net of $1.4 billion.
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