The 17 nation Euro zone has put Greek debt discussions on hold, despite looking like it was about to announce a solution just the day before. This has caused stocks around the world to sink in price as a solution now appears to be in limbo for the time being. Greece as a nation has agreed to pay cuts for officials, layoffs, and other cuts in spending across the nation, but an answer for its creditors now is as far away as ever before thanks to new demands from the 16 other Euro zone members who want to place safeguards that debts will be paid off even after the upcoming Greek election in April. A total of about 300 million Euros have been cut from the Greek budget, and the Euro zone wants assurance that this will remain a part of the deal. A 130 billion Euro bailout package hangs in the balance of this proposal reaching final approval.
The direct result of this took the form in a drop in stock market around the world as well as a selloff of Euros. The Euro dropped in value by about 0.7 percent in comparison to the U.S. dollar. European stock markets dropped across the entire zone, including a 1.6 percent drop in Greece’s benchmark index. Trading in the U.S. was also affected. Despite proving hardy in trading earlier in the week, the Dow Jones Industrial Average dropped by over 1.1 percent early in Friday, February 10, 2012 trading.
But the dollar seemed to be the big winner on Friday going into the U.S.’s trading day. The Euro, the GB pound, and the Japanese yen all had dropped in relative price when compared to the dollar early on in the day. In fact, it looks like the dollar might be reaching the high levels it was at three months ago, before the entire severity of the Greek debt problem was felt by traders and investors. For now, the dollar looks to be a safe haven for Forex traders. There are only a few indicators that say this is not going to hold true for a while, especially now that joblessness in the United States is starting to decrease in severity.