BNN takes a look at the FX reaction to the French and German agreement to help Greece finance its debt, with additional aid from the IMF, with Sebastien Galy, senior currency strategist, BNP Paribas, worth a quick watch, just click on BNN, above.
The plan, which would appear to be driven by the French and German governments has three pillars to it:
1. Bi-lateral aid from the EU states for Greece if absolutely needed, and help from the International Monetary Fund.
2. Financing should be at the market rate, easier for Greece, plus clean up the balance sheet etc.
3. Review of the monitoring of the fiscal side within Europe
4. Belt tightening and near term pain across the union.
Originally the EU states were not to fund other states, so rule changes within the EU are now be required, lots of negotiation still to be done.
One of Doug Casey's saying is that “if it is falling, push it” and Jim Rogers, who said the other day that it would be better to eject Greece as that would show that the EU means business and then the Euro would strengthen, he added that it would be good for all concerned.
However, where would it stop, there appears to be 5-6 countries in the same sort of mess that Greece is in, so they could be picked off one at a time if the Union were to eject Greece, which is not going to happen.
This looks set to run and run, so the Euro could come under more selling pressure and thus more upward pressure on the US Dollar, possibly capping golds progress, we shall see.
Got a comment then please add it to this article, all opinions are welcome and appreciated.
If you would like to get a bit more bang out of your your buck, then check out our Options Trading Service please click here.
To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.
For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.
For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.