Euro Gains Mitigated by Greek Uncertainty
The euro got a bit of momentum on Wednesday morning, trading at 1.2998. The common currency gained strength after an Italian debt auction which restored a bit of confidence in the country. Investors turned their attention to Italy this week as Italian politics became heated just before its regional elections.
Former Italian Prime Minister Silvio Berlusconi threatened Mario Monti at the weekend, claiming he would withdraw his support for Monti and his technocrat government. Withdrawing his support from the party could cause the party to fall from power in the upcoming April elections. Political uncertainty caused investors to question the stability of the eurozone's third largest economy and created downward pressure on the euro.
After a successful debt auction, a bit of confidence was restored, however many are keeping a close eye on the country as its politics could have an effect on the eurozone as a whole.
Data out of Spain also lent support to the euro. Reuters reported on Wednesday that Spain released information showing its economy contracted less than expected in the third quarter. This is welcome news as the country struggles to regain its footing after a financial crisis that some say is on par with the one seen in Greece. The country is still resisting a bailout, however most analysts feel it is inevitable.
Gains due to Spanish and Italian data were mitigated by the ongoing problems in Greece, where officials are still determining how to rework the country's bailout plan. Greece has fallen behind in its budget targets, and will not reach its goals in order to receive its next installment of aid money.
On Wednesday, eurozone officials and ministers are set to have a conference call to discuss options for the struggling country. Many are predicting that no decisions will be made just yet, as the country's debt is still being evaluated. More meetings on November 8th and November 12th are likely to result in firm decisions.
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