German government bonds opening higher Friday, amid fade in risk-appetite as final approval on Greece bailout funds now turns cautious. EU sources told MNI that 10 member states of the Eurozone are reluctant to approve a second rescue package for Greece amid doubt that Athens will be able to implement the measures it has agreed to, given the country’s deeper-than-expected recession and the fact that general elections are only two months away. As mentioned previously, Greece also faces further stumbling blocks in days ahead as the Greek parliament has to approve the package – expected this weekend, before it goes back to another Eurogroup meeting next Wednesday. In addition, there is still uncertainty over the ECB’s involvement in Greek debt after ECB President Draghi at the regular press conference Thursday stressed that the ECB would not take any losses on its bond holdings but signaled it may also not insist on the profits it would otherwise make by holding to maturity bonds that it bought at a heavily discounted price. Given this Greek uncertainty, the risk is on risk-aversion trades ahead of the weekend.
EasyForexNews Research Team