Euro Drops on Greek Debt Deal Delay

Once again, a decision about a Greek debt deal has been delayed. As a result, markets are jittery and the euro is dropping. Indeed, at one point the euro fell to three-week lows on the news that eurozone leaders are unable to reach a decision about how to handle Greece.

The situation is becoming dire at this point, as Greek leaders, led by Lucas Papademos, insist that a debt swap must be initiated by the end of this week if private bondholder obligations are to be met in time for a deadline approaching on March 20. There are even rumors at this point that European leaders will allow Greece to default — as long as its “orderly.”
On top of this news, Moody’s, the ratings agency, says that it is reviewing the statuses of many financial institutions. It indicates that 17 global financial institutions might see their ratings cut. Additionally, there are 114 European institutions that could be cut. The news has many worried about the stability of Europe’s financial system.
All of this is resulting in a flight to safety, with Forex traders preferring the US dollar to the euro. The euro is lower again, and if Greece really does default, the euro might go still lower.
At 14:33 GMT EUR/USD is down to 1.3027 from the open at 1.3067. EUR/GBP is down to 0.8298 from the open at 0.8326. EUR/JPY is gaining, heading up to 102.7510 from the open at 102.4850.

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