Euro Jumps On News Of Latest Agreement Between Germans And French As Market Prices In Nth Greek Bailout

The EURUSD is pushing higher in the low volume afterhours session after a Reuter report that the German and French delegations have reached an agreement over Greece. Since this is about the 6th "pricing in" of Greek  bailout, we can't help but be extremely skeptical that this short-lived bounce will promptly reverse especially since the USD is about to pop on comparable good news to come out from the Obama meeting with Boehner.

From Reuters:

Euro jumps half a cent to $1.4260 in Asia on news Germany and France had reached a joint position on a financial bailout for Greece . Adds to hopes Thursday's EU emergency meeting might actually make some progress on the impasse over Greek debt. Top private bankers will attend the meeting, which is due to start around 1000 GMT. But dealers all too aware that the market has been disappointed before and euro vulnerable to a pullback. Support at $1.4133 with resistance now at $1.4282.

Still plenty of uncertainty over the US debt ceiling talks, with much political manoeuvring going on. The Fed has been drawing up plans should the country default . USD broadly softer as a result, with its index off 0.5 pct at 74.849. It also edged down to 0.8197 Swiss francs and 78.88 yen. Asian focus on HSBC's flash PMI for China due at 0230 GMT, amid talk it could dip below 50.0. Such a result could rekindle worries of a hard landing, even though recent upbeat GDP data suggested the overall economy was still travelling well.

And from Bloomberg:

Merkel, Sarkozy listened to arguments brought forward by ECB President Jean-Claude Trichet, who attended part of the meeting, Steffen Seibert, Merkel’s spokesman said. They exchanged views with EU President Herman Van Rompuy by telephone, Seibert said. Joint Franco-German position will  be presented to leaders at today’s summit in Brussels by Van Rompuy, Seibert said.

And from the FT:

No immediate details were available but Steffen Seibert, a spokesman for Angela Merkel, the German chancellor, said “a common German-French position” had been agreed and ­discussed with Jean-Claude ­Trichet, president of the European Central Bank, and Herman van Rompuy, president of the European Union.

The breakthrough came after Nicolas Sarkozy, French president, rushed to Berlin to hammer out a Greek rescue plan that could include €71bn (£63bn)
in bail-out funds from global lenders and a €50bn tax on eurozone banks, proceeds from which would be used to buy back 20 per cent of Greece’s €350bn in outstanding debt.

The proposals, included in a plan circulated by the European Commission ahead of an emergency summit on Thursday, also include a bond exchange programme under which private owners of Greek debt would be encouraged to swap their holdings for new 30-year bonds. The swap plan could reduce Greek debt by an estimated €90bn. It would be offered, with credit sweeteners, to owners of bonds due in the next eight years.



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