Markets cheer as Greek deal looms

Finally market participants are seeing some light at the end of tunnel in Greek negotiation. Both sides seem to have bend a little.

Greek Prime Minister indicated that his government stands ready to implement reforms as early as next week and ready to compromise. On other hand, German finance minister Wolfgag Schäuble indicated that some debt relief might be required to make Greek debt mountain sustainable.

Challenges:

• However, a debt relief by writing off portions of the debt remains a no go for creditors so a debt relief is likely to come in disguise. A debt relief by reducing interest rates, push the repayment further into the future and changes in moratorium are the likely steps to be taken to provide some relief to Athens.

• On the other hand, Mr. Tsipras faces tough challenge from his own government. Far left faction in the government has threatened to reject proposal which will be humiliating. Mr. Tsipras will have to rely on opposition members to pass the deal. As of now, it seems that Mr. Tsipras will be getting the necessary support from opposition parties, who are keen to ensure a deal with European creditors to avoid an exit from the Euro area.

Euro is up today by 0.43%, trading at 1.111 against dollar.

European equities are up for a second day, heading to weekend. German DAX is up 1.7%, while European blue chip Eurostxx50 is up 2.7%.