Greece Conspiracy Theory and other fundamentals

Greece Conspiracy Theory and other fundamentals

As the month comes to an end, it looks like the Euro looks set to finally halt its 11 months of consistent decline against the dollar. Prospects of the Eurodollar parity may have paused for the time being. It seems like a yinyang struggle, considering that worries over Greece still looms and Quantitative easing seems to be having the desired impact on the regions economy. 


The relationship between Greece and its creditors is getting even more rocky. Both parties cannot seem to come to a compromise as regards the reform plans to which the indebted nation will utilize additional aids granted to it. Jeroen Dijsselbloem, the head of the euro-area finance ministers’ group described the situation as a scenario with  “wide differences” between Greece and its creditors. This is no surprise considering that the indebted nation’s top officials already made it clear that they are not willing to further austerity measures to satisfy their creditors. Considering this turn of events, it is possible that these are efforts meant to frustrate its European counterparts. This could inevitably lead to a Grexit and then the introduction of the drachma. Could this be the grand plan?

In last week’s Eurogroup meeting, Dijsselbloem said: “There is no chance of Greece receiving more aid without a comprehensive deal”. 

Already, the indebted nation has come under local critism for its move to secure 450 million euros ($487 million) from local authorities to boost the central government’s account, intended to ease funding pressures. This could be responsible for the Euro’s recent rise against the dollar as the market generally perceived it as good news.


Recent data from the Eurozone shows improving economic conditions. It may be too early to conclude that the twin objectives of the Quantitative easing which are ‘assuring the economic recovery’ and ‘returning inflation to target’. The Zew index for April marked six consecutive months of consistent improvement in business confidence in the Eurozone. Although, German confidence fell for the first time in five months, probably due to fears of a Greek default as Germany is the largest lender to the indebted nation. The future of the Euro hangs in the balance as long as uncertainty looms about the future of Greece.

On the other hand, the USD ended the week lower against most of its major peers. The bout of weak data may finally be weighting on the dollar as the balance shifts. The major focus is on when the Feds will commence raising rates. Investors and traders will be listening closely to the FOMC statement scheduled for release this week. Other important economic news for release this week which will give further valuable insight into the economic condition include: 

Tuesday, April 28: CB Consumer Confidence

Wednesday, April 29: Advance GDP q/q

                 FOMC statement

Thursday, April 30:  Unemployment claims

Friday, May 1: ISM manufacturing PMI





By Alexander Slavchev
With an allround knowledge of the financial markets, I've covered European and American markets for years - providing detailed technical and fundamental analysis of the forex markets.

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