The Euro has experienced modest movement during local trade as a variety of factors impact the common currency.
The Euro Exchange Rate was in the region of 1.3065 against the US Dollar as of 14:35 GMT
Although Germany approved Cyprus’ bailout package, with a majority of 487 for verses 102 against, the smaller nation’s parliament is expected to hold its own vote on the deal at some time in the near future.
While gaining the approval of the Eurozone’s largest economy (and a significant financier) is imperative, if a vote does occur it could prove a real setback, potentially derailing all that has been achieved so far.
The last bailout package was vetoed by Cyprus last month and only last night George Perdikis, MP for the Green party, asserted that he would be voting against the bailout.
Perdikis was quoted as saying: ‘It is, in my opinion, a crime and wrong to deliver Cyprus into the hands of the troika and allow it to become a colony.’
However, also today German Finance Minister Wolfgang Schäuble issued some positive comments regarding the Eurozone’s economic progress, remarks which were in sharp contrast to those issued by an ECB official yesterday.
Schäuble stated: ‘Step by step we are winning back confidence. If you look at the markets, there is still nervousness and uncertainty. But it is considerably less than three years, two years or one year ago.’
Of the Cypriot aid package Schäuble said: ‘The aid for Cyprus secures the successes we’ve already achieved in the Eurozone. We must prevent the problems in Cyprus from unleashing new problems in other Eurozone countries.’
This, combined with the news that Spanish borrowing costs declined following a bond auction, encouraged investors to turn to higher-risk assets, allowing the Euro to climb against its safe-haven counterparts the US Dollar and Japanese Yen. The Euro to US Dollar exchange rate was little altered following the publication of US initial jobless claims data. The report showed that the number of unemployment claims filed in the US was relatively unchanged from last week.
Meanwhile, the political uncertainty in Italy rumbles on. The Italian Parliament proved unsuccessful in electing a President during the first round of voting as defections from Bersani’s corner made it impossible for Franco Marini to achieve a two thirds majority.
The second round of voting will begin at 3:30 pm.
As analyst Annalisa Piazza observed: ‘This is a sign of extreme division in the majority coalition party and highlights further fragility in the Italian Parliament.’
The new President, who will take the reins from Giorgio Napolitana, will play a key role in ending the confusion inspired by the elections in February (which resulted in a hung parliament) as the head of state appoints the Prime Minister and has the ability to call for a new election.
While the ongoing G-20 meeting, which ends tomorrow, could inspire additional volatility in the market investors will be looking ahead to German producer price figures, due for release at 7:00 am GMT.
Developments in the Italian elections will also be of interest.
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