FXStreet (Barcelona) – According to Credit Agricole, shares the outlook for the EUR into the Eurogroup summit, with uncertainty still lingering whether the creditors will accept Greece’s proposal or not, as noted by eFXnews.
Key Quotes
“The Greek government has submitted its latest reform proposal to its creditors. Various creditor reports suggest that the report is similar to the one offered by the European Commission on June 26 and subsequently rejected at the July 5 Greek referendum. Risk appetite seems to be recovering on the back of hopes for resolution over the weekend. Market sentiment seems also supported given the latest measures by the Chinese officials to prop up the country’s stock market.”
“Despite the latest developments some uncertainty should linger. The Greek reform proposal will have to be approved by the troika today and passed on to Eurogroup ahead of their meeting on Saturday. While there maybe scope for disagreement between the European Commission, the ECB and the IMF especially when it comes to the sustainability of the Greek debt, we suspect that the troika could give the latest proposal a more positive assessment. In turn this could increase the chances of a deal over the weekend.”
“Nevertheless, we believe that any potential relief rally vs. USD should be shortlived, however, with investors quickly re-focusing on divergent monetary policy outlook between the dovish ECB and the data dependent Fed. Needless to say, if the Greek proposal fails the troika hurdle today and/ or the weekend negotiations still do not produce a deal, EUR should lose more ground and open sharply lower next week.”
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