EUR USD (1.3265) The numbers agreed by the Eurozone finance ministers in the Greek bailout deal seem to have come out on the top end of the expectations. Of course the €130 billion figure is against the backdrop of an optimistic scenario which was described in the ‘leaked’ report circulated to the eurozone officials before the deal talks started. What apparently looks new is that besides the ECB foregoing the profits on its SMP portfolio of Greek bonds, the eurozone central banks too will also make some concessions as far as the profits of their individual Greek bond portfolios are concerned. In any case, much depends on how Greece implements austerity measures and accepts the pre-conditions, including the permanent presence of monitors to oversee budget and tax activities and the Eurogroup’s demand that debt limitation be written into law. There are no pretensions in the markets that the bailout deal only envisages staving off immediate default and offers little to stimulate Greece’s staggering economy into recovery. The consequences, therefore, if any of the remaining obstacles proves to be impassable, are clear for investors. The euro showed only a modest rally in response to the deal, but maintains its positive trajectory. We now plan to embark on a bullish strategy in case of pullback to 1.3190 (as long as 1.3320 is not overtaken first) with 1.3130 as risk limit. The objective would be 1.3390, which is anyway the current potential.
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Deutsche Bank