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Thursday, 9 February 2012

Greek austerity deal finalized

According to government sources Greek party leaders managed at last to reach an agreement on the austerity plan, required by the Troika for the 130 billion euro bailout. 

The news was later confirmed by ECB head Mario Draghi during a press conference following the announcement of the interest rate decision. The president refused however to comment on how holdings Greek bonds will be treated.
The Greek coalition has reached an agreement on new austerity measures, finding a €300M worth alternative to pension cuts in the defense sector, among others. 

“The deal paves the way a new financing package from Europe, the outlines of which may come at today’s Eurozone finance ministers meeting”, says Nick Bennenbroek, currency strategist at the Wells Fargo Bank. “It also paves the way for a voluntary writedown of private and possibly official sector holdings of Greek government debt, with those details also likely to become clear in the coming days”, he adds. 

The ECB announced its keeping its Refi rate at 1.00% and that the downside economic risks are wearing off. 

The BoE is also keeping its rate at 0.5% and is adding £50 B to its asset purchase program, as analysts expected: “The pound is the strongest G10 currency today, despite the central bank’s easing”.

The EUR/USD got back again to daily high at 1.3313 on the risk rally, but didn’t hold above 1.3300. The cross is quoting at 1.3285.

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