Euro Jumps On Latest Greek Proposals

A fresh set of measures has been proposed by the Greek government to its lenders on Friday in its latest attempt to prevent their nation from leaving the Eurozone. The latest move by the deeply-in-debt nation was viewed as a step towards a solution to the ongoing negotiations saga, and so the EUR/USD moved with gains on Friday.

While the parliament voted for the new package, Greek Prime Minister Alexis Tsipras was criticised by some members of its own political party that the package proposed included reforms that were actually rejected by Greek citizens through a referendum just one week earlier. The proposals submitted include additional tax within the shipping industry, the unification of 23% VAT across many providers of goods and services, and a massive trim of €300 billion of the budget for the defence sector.

The European Commission (EC), European Central Bank (ECB), and International Monetary Fund (IMF) reacted to the new proposal with a positive tone by describing them as a being a basis for negotiations with Greece. But given the rollercoaster of discussions and reactions through the past several weeks, it could be unlikely that a deal will be reached soon. Included in the proposition tabled by policymakers, Greece requests another €53 billion only to be able to serve its debt until 2018. But the true amount of the bailout could be as big as €75 billion because Greece within the same proposal handed on Friday requests for a restructure of its enormous debt, which is undoubtedly unsustainable by a nation with negative growth forecasts during 2015.

Reports said that the €75 billion requested by Greece through its proposal, €59 billion might become available by the European Stability Mechanism and the rest could be provided by another IMF loan facility. A review was already initiated by Eurozone’s officials on Saturday to examine on whether to accept the measures as the basis of a deal and proceed with providing Greece with additional funding. Of all the Eurozone’s member states, Germany is the one carrying the largest risk as it is the biggest lender and therefore it is also the one more sceptical to an extension of the Greek debt.

Even though the economic situation of Greek citizens has not been any good for a long time now, it has apparently reached a much worse level now that the banks have been shut down for the last two weeks. In addition to that, there is also a limit on ATM cash withdrawals of €60 but the reality on this restriction too is even slightly worse as people are only able to withdraw €50 because in many cases there is no more supply of €10 notes. The EUR/USD on Friday posted significant gains by 0.9% on the back of the new proposal submitted by the Greek government, while on a weekly basis it also increased by 1.5% and ended trading at 1.11583.

While investors across the globe will surely be monitoring the developments of the negotiations and how those could affect the markets, the EUR/USD could have an additional reaction by the upcoming U.S. Retail Sales Data for June expected for release on Tuesday 14 July at 12:30 GMT. Do you have what it takes to ride the next trend wave?