-Antonio Barroso, an analyst at the consulting firm Teneo Intelligence
The Euro dived to the lowest level in 11 years versus the US Dollar as Greece's anti-austerity Syriza party won the general election on Sunday. Now the big question is whether Greece will stay in the Euro zone, as Syriza's leader Alexis Tsipras is seeking to replace the bailout plan, which expires on February 28, with a new agreement that eases austerity and relieves Greece's debt burden. However, Tsipras has abandoned talk of leaving the Euro bloc and highlighted that his government wanted negotiation, not confrontation with international creditors. Germany, the biggest creditor to the rest of the Euro zone, said that it is not prepared to renegotiate the bailout terms, raising the prospect that Greece could end up exiting the Euro zone. Germany also indicated that it is calm about a Syriza victory and that the Euro could cope with a "Grexit" without leading the whole currency to collapse. Additionally, the European Central Bank deployed a massive programme of quantitative easing last week and many investors feel that the financial markets can cope with the new, radical Greece.
Meanwhile, German business executives remained optimistic in January, with the German Ifo Business Climate Index, which based on a survey of manufacturers, builders, wholesalers and retailers, rose to 106.7 in the month under review, beating economists' expectations for a 106.5 reading.
© Dukascopy Bank SA