Reports are emerging from Greece that the country will ask for some kind of an extension of the bailout until Thursday. They are probably going to only ask for more money – a loan extension, without an extension of the austerity bailout program. The delay until tomorrow means that Athens waits until after the ECB decision.
EUR/USD is battling with support, and isn’t convinced that this is the road to a solution.
The Eurogroup working group, below the finance ministers levels, is meeting in Brussels tomorrow, and an emergency full Eurogroup meeting is expected on Friday.
The Germans, with the vocal finance minister Wolfgang Schäueble standing out, are against any change in the current program, which implies a high primary surplus of 4.5% and harsh austerity. The French, with finance minister Sapin reportedly offering a 1.5% target which Greece accepts and EU commissioner Moscovici (former finance minister of France), have shown some willingness to compromise.
So far, the Germans have the upper hand.
The exact wording of the Greek request certainly matters for the German acceptance and for the acceptance of the proposal within the Greek public:
Little bird tells me delay of submission of bailout xtension request til Thurs involves crucial finetuning both in wording &essence. #Greece
— Yannis Koutsomitis (@YanniKouts) February 18, 2015
The ECB, based in Frankfurt, convenes today for its bi-weekly decision on the Emergency Liquidity Assistance to Greek banks. As money is withdrawn in some kind of a “bank marathon“, and the ECB does not accept Greek government bonds as collateral since February 4th, a cut off of funds to Greek banks is the “nuclear stepâ€.
The ECB is likely to refrain from such a step as long as negotiations continue.
EUR/USD
The euro is pressured to the downside and trading below support at 1.1373. Further support awaits at 1.1313, followed by 1.1270. Resistance appears at 1.1460.
Here is how it looks on the chart:
