Commodity prices dipped and the euro fell close to a recent three-month low on worries that Greek political uncertainty and a French leadership change may undermine the eurozone’s austerity measures.
In particular, Greece’s recent general elections and the election of France’s President Hollande show a growing consensus against reigning eurozone economic policies. Most notably at risk are Greece’s bailout agreements and austerity measures. If they were dissolved, says Jason Conibear, Director of Cambridge Mercantile, it could be a disaster:
“If that should happen then all faith in the euro will be lost. My view is very simply that anybody who has any form of euro income over the next six months or so should be hedging and protecting their companies against risk.”
Although Greece’s pro-bailout parties failed to win a majority in weekend elections, the left-wing party that considers the bailout agreement “null and void” also failed to secure a front-running position. This fragmentation among the vote could mean that a re-election is on the horizon – keeping the fate of the euro hanging in the balance until a clear winner appears.