Greek catastrophe affects Euro – South Korean Won up on EU Greece helping plan

Greek catastrophe affects Euro – South Korean Won up on EU Greece helping plan

02-11-2010 09:23

This Wednesday, the Eurozone currency lost its advance, gained by speculations that the European Union would support Greece to solve its fiscal problems, due to expectations that the issue might not be discussed in the eurozone meeting of tomorrow, decreasing hopes among currency traders that the Greek budget deficit problems will end soon.

Greece budget deficit

Solutions for the Greece budget deficit problems will not be introduced tomorrow, according to a German official. Even if the European Union meeting will feature the topic, Europe’s Single Common Currency declined against a number of main currencie, following a rally in which the Common European Currency rose particularly against the Japanese Yen and the US Dollar yesterday. The Greenback erased the majority of yesterday’s losses against the Euro, in spite of pessimistic trade balance data released in the United States this Wednesday, demonstrating that traders are more worried about the situation in Greece than normally about other significant economic figures.

Bailout plan ECB

Tomorrow’s European Union meeting, with or without Greece as the most important issue, will set the Single Currency’s rates for next week’s trading session. However, if the majority of the currency traders regards the Greece situation as complex and gloomy, despite a possible bailout plan by the European Central Bank, the eurozone currency will probably continue its negative trend.

Increased risk appetite

Following several trading sessions of solid risk aversion that hit emerging currencies, traders became more positive due to speculations that an EU plan to rescue Greece, increasing risk appetite and providing the Won support to perform better than other Asian currencies.

South Korean Won

The next days will strongly influence the market sentiment among currency traders, given the fact that the EU will probably present solutions for the Greece fiscal problems, if the nation is able to execute the measures created by the ECB. These speculations provided the Won support to advance significantly against a weaker US Dollar this Wednesday, as a positive sentiment altered market circumstances, following more than a week of losses for Europe’s Single Common Currency and more-profitable currencies, like the South Korean Won.
 

16-nation euro area

The Won is strongly associated with the economic conditions in the 16-nation euro area. In one hand, the eurozone is the main destination for South Korean manufacturing products, including heavy machinery and electronics, while in the other hand, the South Korean financial profile is regarded as an emerging market. For that reason, the Won is a more risky investment and thus posting better results when risk appetite dominates markets.