The euro continued to lose ground today as Greek public sector union leaders call for an increase in the intensity of protests against government spending cuts. The “austerity” cutbacks are part of the deal to ensure aid money from the EU and IMF arrives in time to meet upcoming debt payments due later this month.
A noisy gathering in front of the Greek parliament resulted in confrontations with police who fired tear gas at rock-throwing protesters. The potential for increased violence – and even some questions regarding the government’s ability to follow through with the promised cuts – have investors moving away from the euro. On Tuesday, it hit a one-year low against the dollar, falling below $1.31. Greek bonds also tumbled, pushing yield spreads with benchmark German Bunds above 600 basis points.
Source: Reuters
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