Austerity or not, that is the question.
The continuing drama over the Greek financial situation is wrecking havoc with the Euro and by default, the rest of the commodity complex. On Friday Der Spiegel reported that Greece was threatening to leave the EU and that put doubt in the mind of traders and fear that such an outcome would destroy whatever credibility the euro zone had left. The truth is the so called threat was probably a ploy by Greece to secure better terms on their painful austerity plan.
The euro and its value is part of the major fundamentals that rallied oil and then caused its ignominious correction. Now as reported by Bloomberg News, "European Union leaders are showing their resolve in keeping the euro region together, agreeing in an unannounced meeting on May 6 to review the terms of the €110 billion ($158 billion) lifeline Greece received last year."
That came on the heels of a week where as reported by Bloomberg, "The euro tumbled 3.45 percent in the final two days of last week, the biggest back-to-back loss since 2008, as the European Central Bank signaled it is in no rush to raise interest rates and Der Spiegel magazine said Greece may withdraw from the currency bloc. EU officials denied the report and said Greece will need more aid after investors drove yields on its two-year notes to more than 25 percent."
Now the euro could be back under pressure as Standard & Poor's rating service said it lowered Greece's long-term sovereign credit ratings to B from BB- and the rating may be lowered further according to S&P. That downgrade will increase worries in the region and perhaps hurt the euro and help the dollar.
Violence in Syria and Egypt is keeping the market on edge. Not to mention the continuing war in Libya.
Phil Flynn is senior energy analyst for PFGBest Research and a Fox Business Network contributor. He can be reached at (800) 935-6487 or at firstname.lastname@example.org.