Greece Remains the Focus on Monday’s Asia-Pacific Session

Greece continues to be all the talk during Monday’s Asia-Pacific session with rumours of a massive bailout package giving equities a bit of a boost.

According to German newspaper Der Spiegel on Sunday, the euro zone nations are considering a €20 to €25 billion aid package to Greece.

According to the article the share is calculated according to the proportion of capital which each European nation holds at the European Central Bank, said the magazine, citing talks held when the body first began considering aid for Greece.

Allegedly, German officials have declined to comment on the report.

Meanwhile, in an interview with Welt-am-Sonntag Greek Finance Minister George Papaconstantinou said the euro’s problems extend beyond Greece’s budget concerns with the financial markets are betting on another euro zone nation to experience similar problems, deepening the problems in the region.

Indeed speculation over the concerns in Greece have been responsible for the weakness we’ve seen in European bonds this week, and this sentiment has continued despite assurances from the European Community that Greece will not default on its debts. The current concern is that another euro zone nation will announce similar problems to Greece, a development which would likely weigh further on the euro even if much of it has been priced into the markets already. Should the euro zone successfully and credibly defend itself from this speculation down the road, expect the euro to rally.

Finally, speaking in an interview with BBC news, Greek Prime Minister George Papandreou said the nation does not want financial aid from the European Union, just time and political support.

As stated in the past, a bailout of Greece is not likely to be of much help to the euro whose credibility had already been damaged by the willingness of the euro zone nations to bailout the Greeks in the first place. That being said, if the euro zone can credibly convince the markets that no other country in the union will suffer the same fate as Greece, the euro should make a comeback.

EUR/USD last traded higher by 24 pips at 1.3637 after trading in a range of 1.3602 to 1.3648 so far today.
Short term support lies at 1.3444, followed by 1.3424 and 1.2886 with resistance at 1.3647, 1.3788, and 1.3801.