THE EURO hit a two-month high against the dollar yesterday after Greece agreed to an austerity package in exchange for new funds, but questions on whether the deal will be enough to avoid a messy default curbed gains.
News that Greek leaders had clinched a long-stalled deal just hours before a key meeting with the country’s financial backers encouraged investors to take on some risk, driving down prices of safe-haven US Treasuries.
Oil rallied more than 1 per cent on the agreement, which is crucial for Greece to secure a €130 billion bailout from the European Union and the International Monetary Fund. Still, investors wondered whether Greece’s promises will be enough to secure the funds, as well as what contribution the European Central Bank will offer in the restructuring of Greek debt.
“There is still a fair amount of scepticism that these agreements won’t amount to action, given the history,” said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. “The market’s taking a wait-and-see approach.”
On Wall Street, investors seemed tempted to take some profits after weeks of gains, keeping a lid on key stock indexes.
“There is definitely a whiff of ‘sell the news’ in the air,” said Michael Marrale, managing director and head of sales trading at RBC Capital Markets in New York. “We’ve climbed this wall of worry and the first reaction for people is to hit the sell button.”
