Euro Plays the Debt Crisis

Greece Debt

Greece Debt Crisis

The Euro saw some big gains in relation to the U.S. dollar in early trading on Thursday, March 08, 2012. With the Greek debt deadline looming, investors saw some big gains for the Euro as the outlook for a solution to Greece’s debt problem became more likely. The Euro rose from about 1.310 up to over 1.325 in just a few hours—an increase of almost 1 percent. In fact, over 75 percent of qualified investors in the Greek bond market approved a debt swap deal on Thursday and began paving the way for a smooth transition toward healing the troubled Greek economy. 75 percent was the minimum voting percentage that Greece had set forth in order to approve a debt relief deal. Still, Greek officials are hoping that this number can grow to around 90 percent. The more people that support this debt swapping, the better off Greece’s economy will be in the future.

The Euro also showed its strength in relation to other currencies. Against the yen, for example, the Euro rose by over 1.3 percent. Against the usually strong British pound sterling, the Euro rose by almost 0.4 percent, indicating that worldwide sentiment for the Euro is finally changing toward its benefit.

As Greece and the rest of the European Union march toward a finalized solution, the Euro will only have one direction that it can go: upward. Consumers want a show of strength and stability before they are willing to invest into this currency in a more serious manner. Thursday’s outing indicated that this was a very good likelihood. Even if the Greek resolutions take a few more days before they are finalized, it is clear that investors have confidence in the formerly beleaguered Euro.

The safest course of action is to wait for confirmed news that the Greek debt deal has been completed and will be implemented. But for those willing to take a higher degree of risk, jumping on the Euro now could have huge benefits. In 2008, the Euro was once up to almost 1.60 against the USD. There is every indication that this could happen once again in the future—assuming Europe heals itself economically. In this event, profits of up to 40 percent are very realistic. Of course, this might be a few years in the making, but the Euro is, for the most part, a well reputed form of currency. Barring major problems in the European economic and political infrastructure, there is a good chance that the Euro will be able to rebound back to its glory days in the 1.5 range. As the Greek solution becomes clearer, the Euro will most probably see a drastic increase in strength. The latest news and how the Euro reacted is a strong indicator of this.

This was as of March 8, 2012. A lot has changed since Non Farm Payroll came out this morning.

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