Greeks Pass Yet Another Austerity Bill

Late Sunday night, Greece's parliament passed yet another bill enacting further austerity measures. As the result of this plan being passed, the country will likely get the next tranche of its bailout financing from the Troika. Greece may then be able to avoid defaulting in March, when the country was likely going to run out of funding.

The EUR/USD pair followed its recent pattern, rallying slightly on the news. Short sellers (the currency pair has been heavily shorted) may have moved to cover some of their positions in the face of this announcement.

The Greeks continued to resist further austerity measures, as violent protests in the streets of Athens led to nearly 50 buildings being burned.

The Greek protests have been largely led by trade unions, many of which would suffer under the terms of the latest austerity measures. Wages would be slashed and public workers would be laid off if the promised austerity legislation were to be carried out.

Yet, that prospect may appear unlikely. Greek opposition leaders have already called for the legislation to be rolled back at some point in the future. While the visible Greek opposition may be coming from a small, vocal minority, if many Greeks oppose the austerity measures, then it may be likely that upcoming elections produce Greek governments who prefer to declare bankruptcy rather than deal with the ramifications of slashing budgets.

A second European LTRO is scheduled for the last week of February, and such an operation may prove to be bearish for the euro against the dollar, although it could further stabilize the region and support equity markets.

US equity markets were initially trading higher on Monday, as Dow futures moved up almost 1%. Yet, that optimism may have been short lived, as markets pulled back slightly later in the session.

Germany's Angela Merkel spoke on Monday and declared that the current Greek plan would not be changed.

Earlier in the day, Germany's finance minister Wolfgang Schauble characterized Greece as a bottomless pit. He further declared that Greece's promises were no longer enough for Germany.

While Schauble's rhetoric may sound harsh, in reality it may be seen as a given.

The EUR/USD currency pair has traded on the Greek story for quite some time. With continued uncertainty over the outcome persisting, the currency pair could continue to be volatile as the Greek situation progresses.

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