Investor fears for the beleaguered Euro continued to mount in Asian trading this morning as the leader of Greece’s Syriza bloc announced the coalition he is trying to form to run the Greek government will be based on the tearing up of the terms and conditions of the bailout received from the IMF and EU. With just 3 days to reach a deal, the coalition seems to be based around the rejection of the budget cuts and austerity measures as part of the bail out deal. Greece received two trenches of bailout funds – totaling 240 billion euros, for which Greece agreed to make large cuts to pensions and the payroll, raise taxes and cut thousands of public sector jobs. The next tranche of funds is due in June, but this is under serious doubt.
The left wing coalition in Greece might not pose as big threat as the new socialist president of France – Francois Hollande, but it is in stark contrast to what was announced in Portugal yesterday. Having agreed a 78 billion euro bailout deal with the European Union, European Central Bank and International Monetary Fund last year, Portugal declared that is scrapping 4 of its 14 national holidays as part of its austerity measures. Portugal has already slashed public sector wages and increase taxes in an attempt to cut its budget deficit and tackle its economic crisis. This, however, was not enough to allay investor concerns over the Euro, which saw the single currency hit new lows against the USD and GBP. German production data prevented the euro from falling too far with German industrial output jumping to 2.8% in March, much more than the expected the 0.8% increase, having declined 0.3% in February. At time of writing the EUR/USD was down 0.23% trading at 1.2976 having passed the big psychological 1.30 barrier.
Today, eyes will remain on Europe as Germany announces their trade balance at 7am GMT and 5 year debt auctions at 10.30am GMT. In commodities, US Crude Oil and Gasoline stock piles are declared at 3.30pm GMT.
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