The Eurozone currency hovers near a 30-month low against the US Dollar today due to the uncertainty spread in the union by the developments in the Greek political scene. The Greek Parliament yesterday failed for a third consecutive ballot to elect a new President of the Republic and the country is driven to snap general elections, to be held on January 25. Such a development seems to worry global markets.
The Greek main opposition leftist party, SYRIZA, that is steadily leading the polls in Greece, opposes many of drastic spending cuts of Greece’s bailout program. Lee Hardman, an FX strategist at the Bank of Tokyo Mitsubishi said to Reuters,”The developments in Greece have prompted some concerns among global investors, at least in the near term, which is boosting safe-haven demand for the yen. It’s probably fair to say Greece could leave the euro and it would have less of an impact than in 2012, but it would be dangerous.”
The market’s reaction to the outcome of the Greek presidential vote was by far better than the first time around, in 2012, when the previous general elections were held in Greece. Since then, the Eurozone has set up a new banking watchdog and the European Central Bank is scoping out government bond buying.
The Euro had touched 1.2130 US Dollars, its lowest since August 2012, although its slip against the Dollar has been limited thus far — down by only 0.2% on the day — as the outcome of the Greek parliamentary vote was not a total surprise and was already priced by some. Still, other participants urged caution, as the political turmoil in Greece was only in its early stages.
Apart from the two-and-a-half year low the Euro recorded compared to the US Dollar, the oil prices also reached a five-and-a-half year low, as there are persistent worries about a global supply glut grow, as its pricing currency, the Dollar, hovered near an eight-year high.