Euro bears are fleeing on expectations of a Eurozone bailout, note the huge EUR/USD move in just the last hour. Yet even a bailout from stronger Eurozone nations doesn’t change the euro’s aggregate debt situation. For the euro currency system, debt is debt whether it be Greece’s or France’s. Only an unlikely bailout from outside the Eurozone would change the aggregate debt situation.
Thus for the time being at least, shorts appear to have been benefitting from euro-weakness due to uncertainty alone, rather than the actual debt position of the Eurozone.
Also, this just out:
Bernard Valero, a spokesman for France’s foreign minister said Tuesday that “we must help” Greece. “It’s about helping a friend … we are the European family.” He did not give any details of that help.
European Union leaders will issue a statement on Greece’s debt crisis during a Thursday meeting, officials said Tuesday, but added the contents had not yet been discussed and would not say if it would lay out details of a possible bailout.