By Christopher Vecchio, Currency Analyst Who said Greece was irrelevant? After becoming an afterthought to many market participants for the first several months of the year, the May 6 elections catapulted Greece back on to the world’s stage for what looks to be the last act in the Greek sovereign debt saga. With the center, pro-bailout parties, the conservative New Democracy party and the left-leaning PASOK party, losing power to fringe, anti-bailout parties, mainly, the far-left Syriza, concerns have been raised that Greece could end up leaving the Euro-zone. Last week, each major party, first New Democracy followed by Syriza then PASOK, were handed mandates to form a coalition government. Each failed, culminating in one final meeting today. However, any hopes built up that the Greek leaders could find common ground were misplaced. Rhetoric from both the left and the right has been standoffish, to say the least, with the left (Syriza) calling for a moratorium on debt servicing and the center (ND and PASOK) calling for further austerity measures in order to receive additional bailouts from the Euro-zone. Today, the worst of fears were realized, when Greek leaders announced that no coalition government was formed in a last-ditch effort, and that new elections would be coming. This is a poor development for the Euro experiment, as it likely means that the anti-bailout parties, mainly Syriza, will garner enough support to form a coalition on their own. This could result in Greece defaulting on its debt and leaving the Euro entirely – a scary prospect but objectively possible nonetheless. EURUSD 1-minute Chart: May 15, 2012 Charts Createdusing Marketscope – Prepared byChristopher Vecchio Immediately after the news, the Euro was slammed across the board, collapsing against the safe haven currencies, the Japanese Yen and the US Dollar. In fact, against the later, we note that the EURUSD fell from 1.2841 to as low as 1.2770 within twenty minutes following the news. Although there’s been a small bounce, given the severity of the Euro-zone’s issues, it is likely that the EURUSD continues to sell-off should concerns hit the bond markets (which they appear to be with Italian and Spanish 2-year note yields climbing). --- Written by Christopher Vecchio, Currency Analyst T o cont act Christopher Vecchio, e-mail email@example.com Follow him on Twitter at @CVecchioFX To be added to Christopher’s e-maildistribution list, send an e-mail with subject line "DistributionList" to firstname.lastname@example.org
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