More woes and strikes in Greece and disagreement about ECB policy in German high courts could not discourage the euro from posting four-month highs against the USD. The euro reached its highest point, $1.3346, against the US Dollar since February 20th. Meanwhile, a lack of a policy statement from the Bank of Japan (BoJ) about the volatility of its equity markets prompted global selloffs in equities. The yen continued its surge against the dollar falling to 95.16 before settling at 95.40, down 0.6 percent on the day.
Currency market trade was light on Wednesday but the concern about Federal Reserve policy outweighed the negative sentiment from Europe and Japan.
Athens in Upheaval
Demonstrations erupted in Athens as unions rallied in support of journalists after the Samaras government unexpectedly shut down the nation’s public television station, ERT, in the middle of the night. The closing of the liberal network eliminated 2,600 jobs including 600 journalists. The Helenic Broadcasting Corporation ETR has been up and running for 75 years.
The beleaguered station only has a 13 percent viewing rate. Several dismissed journalists continued to occupy the building in protest of the shutdown. The Athens journalistic union ESTEA immediately announced a strike. Thousands of citizens protested in front of the Athens station and then proceeded to march on the capital.
The station was closed as a result of a ministerial decree and surprised many members of the divided Parliament. Prime Minister Samaras’ short reign has been marred by controversy and dissension.
The most recent setback was the revelation that a sale for the national gas company fell through. This failure puts Greece on the verge of default with its bailout commitments. Under terms of the bailout, Greece was obligated to terminate at least 2,000 state employees. The closing of ERT meets that stipulation. However, the government has failed to meet its commitment to liquidate state-held assets.
The closing of the state television network overshadowed more serious problems. MSCI reclassified the country as an emerging market. MSCI stated that the Athens bourse has been to small for a developed economy for the past two years. This could have serious repercussions with funds that have invested in Greek bonds. Optimists believe the reclassification will open up other investment vehicles.
Yields on Greek 10-year bonds nudge above the 10 percent mark when Athens announced failure to sell DEPA, the state gas company. Equity markets traded at two month lows following the reclassification.
MSCI’s world index slipped by 0.13 percent on Wednesday. The Euro STOXX 50 index dropped 0.62 percent to 2,666.52. The euro climbed 0.27 percent.
The yen gains were sparked by the Fed’s perceived slowdown in asset buying and the BoJ’s inference that it will continue its easing program. The markets has expected a pullback by the BoJ.
Forex Trading Articles by Forex Blog & Online Forex Trading