Greece calls for snap election as Eurozone fears resurface
Senior Consultant, HiFX
Post date: Wednesday, 11th April 2012
Sabrina Derrough of currency specialist HiFX on the announcement of a Greek snap election and the stability of Italy and Spain.
The spotlight is returning to Europe after a brief period of calm with the announcement that Greece has called a snap election for 6 May 2012 and the renewed focus on Italy and Spain's stability.
The spread between the benchmark German 10-year bond and its Spanish and Italian counterpart's widened on continued bearish data and rumours that GDP estimates across the southern Mediterranean countries will be sharply revised downwards.
The uncertainty remains whether the Eurozone has enough left in the tank should Spain or Italy need emergency rescue loans, and the worry is dragging down equity markets from recent highs along with risk-currencies like Sterling and especially the commodity currencies which have been the main casualty of recent risk aversion.
Equally, the announcement this morning that Greece is holding a snap election is also adding to the uncertainty.
However, in reality the snap election and who will win on 6 May 2012 should not make one iota of a difference as both the EU and the IMF have warned Greece that whoever wins the country must stay the course and get its finances in order or bailout aid will cease.
Whoever wins will have minimal wiggle room, get the Greek house in order or leave the Euro, a sense of déjà vu prevails.