[B]Eurozone agrees to further €12 billion for Greece
Eurozone finance ministers have agreed to an additional 12 billion euros in bailout funds for debt-crippled Greece, days after the Greek parliament passed a new raft of austerity measures amid violent protests in the capital, Athens. [/B]
Euro zone finance ministers agreed on Saturday to disburse a further 12 billion euros to Greece and said the details of a second aid package for Athens would now be finalised by mid-September.
After a conference call, the 17 euro zone ministers agreed that the fifth tranche of a 110-billion-euro bailout agreed with Greece in May 2010 would be paid by July 15, as long as the IMF’s board signs off when it meets on July 8.
The payment will allow Greece to avoid the immediate threat of default, but the country still needs a second rescue package, which is also expected to total around 110 billion euros and which ministers said would be worked out “in the coming weeks”
[B][U]The euro rose to a one-month high against the dollar [/U]in Asia on Monday while commodity currencies like the Australian dollar held onto last week’s hefty gains, as diminishing worries about Greece prompted investors to embrace risk.[/B]
Trading though is expected to be subdued with U.S. markets shut for the Independence Day holiday.
Euro zone finance ministers on Saturday approved a 12 billion euro instalment of Greece’s bailout and said details of a second aid package for Athens would be finalised by mid-September.
However, they signaled that Greece must expect significant losses of sovereignty and jobs. As well, whether Athens can successfully implement the reforms demanded by international lenders remains to be seen. All of which means the euro’s path higher will be strewn with obstacles.
Still, BNP Paribas analysts said if it became clear that dips aren’t running much below $1.4500, real money investors would be tempted to add long euro exposure in the week ahead and leveraged accounts would also start betting on further gains in the common currency.
“Thursday’s ECB meeting now looms large. The easing of Euro peripheral stress should allow markets to re-price further policy moves from the central bank, perhaps following the message to be delivered by ECB President Trichet following the rate rise set to be announced on Thursday,” they wrote in a note.
The euro last traded at $1.4572, extending last week’s 2.5 percent rally – its heftiest since January. The breach of last week’s high around $1.4551 triggered more stop-loss buying, traders said.
[B][U]Stocks at 4-1/2 week high, risk back in favour[/U][/B]
[B]World stocks hit a 4-1/2 week high on Monday and oil rose as investors grew confident over the prospects for the global economy after Greece avoided an early default on its debt and data pointed to a moderate slowdown in China’s growth.[/B]
Shanghai stocks hit a six-week high after data last week showed Chinese manufacturing growth moderated in June, raising expectations that the economy may not be headed for a sharp slowdown despite monetary policy tightening.
Over the weekend, euro zone finance ministers approved a 12 billion euro installment of aid for Greece and said the details of a second aid package would be finalized by mid-September.
But the euro pared its gains after ratings agency Standard & Poor’s said a debt rollover plan being considered for Greece may still put the country into "selective default.
“Greece was always going to be a sticking point and this issue of debt rollover and rating agencies views will be something that the market will keep an eye out for,” said Jeremy Stretch, head of currency strategy at CIBC World Markets.