EUR USD (1.4365) George Papandreous’ socialist government won a confidence vote in parliament last night, opening a chance for the Greek prime minister to oversee another vote next week on his new austerity measures. His entire party stood in favour of the government, with former defence minister and recently appointed Finance Minister Evangelos Venizelos stressing that Greece can win this ‘war’ with confidence, solidarity, and unity. Nevertheless, this was only the first skirmish of many before the sovereign debt crisis is resolved, and the victory was only within the halls of parliament. Tens of thousands of citizens protest the austerity measures daily on Syntagma Square, as they watch the belt-tightening squeeze their standard of living. According to Eurostat, the European statistics agency, per-head incomes in Greece are only 89 percent of the eurozone average – 5 percent less than one year ago. Meanwhile, not only Greece’s residents fear deeper austerity – the EU debt crisis has also darkened the mood of German consumers. According to a Forsa survey published in Stern magazine, 44 percent of the respondents, and fully 49 percent of the self-employed, reckon with an economic downturn. It should come as little surprise that 56.7 of Danes oppose adopting the single-currency. The ‘No’ vote reached an all-time lead over the ‘Yes’ vote in June.
The euro came within 20-pips of our stabilisation hurdle at 1.4455 last night. New demand enters today at 1.4320 and at 1.4215.
Market Bias Index
The Market Bias Index strongly resembles that of the day previous, except that the Canadian dollar too has now retreated to its ‘fair-value’ level.
Deutsche Bank
Fixed Income Research – Global