The euro began the new trading week higher after being given a lift by positive news from Greece over the weekend, triggering some risk appetite.
Opinion polls show that Greece’s pro-bailout parties winning majority with the Greek conservative party, led by Antonis Samaras regaining the lead. A win by this party in the June 17 “repeat” elections would ensure Greece’s commitment to the EU/IMF bailout terms on austerity measures which would increase the likelihood of Greece remaining in the euro zone.
The May 6 elections were inconclusive since the results left the Greek parliament divided between political parties that support and oppose the austerity conditions, meaning no one party gained majority. The subsequent failure in creating a coalition government raised political uncertainty and caused turmoil in the currency markets, bringing the euro down to its lowest levels since July 2010 for fear of Greece exiting the euro and not conforming to the terms of the 130 billion euro bailout agreed with international lenders.
Various polls published over the weekend press indicate that the New Democracy party, which is Greece’s conservative party which supports the bailout, with a lead of between 0.5 and 5.7 points over the anti-bailout leftist Syriza party. Syriza has said it would ditch the country’s bailout deal that has led to record unemployment and severe wage cuts.