Greece's auction of treasury bills drew stronger demand than at a previous sale, signaling renewed investor appetite at the government's first offering of debt since winning an aid package from the European Union.
BNN speaks with Jessica Hoversen, fixed income and foreign exchanges futures analyst, MF Global.
In a nutshell Jessica points to the on-going problems of both liquidity and solvency, along with an economy which is expected to continue to decline so Greece may have to go to the IMF eventually. Ireland, Italy and Spain have committed funds to the thirty billion support package, should Greece need to call on it.
It begs the question of just where do these other countries get the funds, they have a surplus of their own financial problems as it stands, the mind boggles.
Please click here to catch her opinions.
The following update is by Sophie Laubie (AFP) who reported the following:
The finance chief for the 16 euro countries, Luxembourg premier Jean-Claude Juncker, said on Tuesday he was "reassured" by market reaction to a 30-billion-euro backstop Greek bailout.
"We took the right decision on Sunday ... I am reassured by the reactions of markets since,"
Juncker told AFP in his Luxembourg offices.
He was referring to a firming of the euro against the dollar on Monday and a fall well below 7.0 percent for the interest rates that debt-stricken Greece must pay to borrow on bond markets.
Juncker, the formal head of the euro finance ministers grouping, will hear from his peers in Spain on Friday as they assess political progress on activating the plan, aimed at calming market fears of Greek default and preventing the euro currency from entering freefall against the dollar.
Dismissing fresh doubts surfacing among analysts over the scheme's readiness and scale, he said he was pleased that a Greek government auction of short-term loan notes on Tuesday had been "oversubscribed at acceptable rates."
Dangling a return of over more than 4.0 percent, Athens raised 1.56 billion euros (2.12 billion dollars) from short-term treasury bills compared to an initial target of 1.2 billion euros.
The loan drive resulted in a rate of 4.55 percent on the six-month bill, still more than three times that paid in January.
Juncker said Europe would have to "wait several days" to reach a "definitive" judgment on how the rescue plan, which would involve another 15 billion euros in loans this year from the International Monetary Fund subject to ongoing negotiations, had been received "in its entirety."
As we can see from the above chart the US Dollar has come off its highs since the development of the bail out strategy for Greece. Still to be finalized the perceived solidarity has helped the euro to stabilize against the dollar, but for how long. We'll be keeping an eye on the situation as it unfolds as a slight weakening in the dollar could be the trigger to send gold prices higher and ultimately challenge its old high.
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