The Greek sovereign debt crisis has unsurprisingly dominated currencies action involving the euro.
The EURUSD is up on last week after noises coming from Greece and eurozone finance ministers continued to be positive. Although little should be read into this, as historically almost every indication of hope regarding European debt crisis, and in particular Greece, has petered out into disappointment.
The situation in Greece is too dyer to be solved by one decree or positive statement, but positive economic news currently coming from major economies has had a placating effect on the crisis, meaning investors looking for risk are less worried by the issue.
An increase in risk attitude and covering of short selling by traders and hedge funds has definitely led to the Euro surge over the past couple of days. The same appetite for risk has caused the USD to suffer across the board.
The Greek deal was struck in Brussels in the early hours of this morning, it is unclear how this will effect equities and FX markets, in part because there is still a feeling that the deal could yet collapse in the coming days.
Despite the positives coming from the settlement, namely that an agreement with its creditors has now been reached which in turn will prevent Greece officially defaulting in the coming months, there has been criticism from numerous market analysts, most notably Goldman Sachs, that the new agreement will stifle and chance of growth in the country, making it near to impossible for Greece to match the target the deal has set for it.
This may be the reason that the immediate impact has been a defensive reaction from equities markets after gains throughout the last week, with major indicies across Europe down, a move different to that which might have been expected.
The situation is still certainly not a clear one yet, and the markets have echoed this. Credit default swaps are up across Europe, indicating the deal makes eurozone countries and business more likely to default on their debt, but bond yields have fallen today in Italy and Spain, meaning that at least some investors are confident that the news is positive for at least part of Europe.
If the hype coming from Greece and Brussels calms down over the coming days, the eurozone horizon may become a lot clearer before too long.