Big news in Europe last week! After eight years, a lot of political maneuvering and €289bn later, Greece has now exited its bailout programme meaning it can now borrow funds once again on the capital market. For the Euro, which has been dipping into one-year lows of EUR/USD 1.13, the risk still remains in Turkey. Indeed one facet for the Euros slide to 1.13 were fears that Italy and Spain could be overexposed to Turkish debt. Currently, the market isn’t sold on the policies of President Erdogan and finance minister Albayrak with credit agencies S&P and Moody’s both cutting Turkey debt rating deeper into junk status.
Another key piece of news came out of Germany and German Bundesbank President and ECB member Jens Weidman, who has long be known as an interest rate hawk, once again reiterated his desire to exit the ultra-loose monetary policy that the ECB is currently employing and not delay the return to neutral rates. Weidman has also long been seen as the natural successor to Mario Draghi and the forerunner, however, there are now reports that Angela Merkel pushing for a German to have the top job at the EU Commission rather than the ECB (one country can’t hold both roles).
The EUR closed the week at 0.86 versus its US counterpart.