Greek Plan aids Euro Despite Chinese Concerns

Increases in risk appetite helped the Euro gain more ground during the night with the EURUSD rising as high as 1.4020 before retracting to its present value of 1.3995 (see hourly Chart).

Both the safe-haven Dollar and Yen fell upon the news that the European Commission intends to back Greece’s deficit-cutting plan. This move has done much to ease the markets’ concerns about Greek fiscal problems.

By 2012, Greece will attempt to reduce its budget deficit to below 3% of its GDP despite problems it may face from stiff domestic opposition. Although the Euro has benefited from this development, analysts are still advising that Euro prospects may remain poor because of the weak financial state of other Euro-zone member countries.

Fears were ignited briefly during the night after two Chinese banks called back some loans. Any signs that China intends to reduce its credit facilities is enough to spark increased levels of risk aversion.

Advanced warning of the US Employment Situation will be available soon when the ADP January private-sector employment report is due to be posted. This information could provide clues for the highly-awaited Non-Farm Payroll figures that are scheduled to be released on Friday.