More relief for Greece, September EUR/USD futures to extend LIBOR curve

Eurozone FMs have accepted Greece's 3^rd salvage program on Friday in euro group meeting. The European Commission proclaimed in a report that it was prepared to pay out "new loans of up to €86 Billion over the next three years" to the troubled member. Underlying the agreement to the 3^rd package in 5 years was a widespread list of reforms and the open question as to whether the IMF would remain party to the deal.

The 3^rd bailout package will be dispersed in three installments. The first payment will measure €26 Billion. This will aid cover an August 20th repayment owed to the European Central Bank to the tune of €3.2 Billion. A bulky €10 Billion in funds was being earmarked for a bank recapitalization fund with another €15 Billion available should it be needed. The funds will be dealt through the ESM and will be made available after stress tests.

The LIBOR zero curve out to 1Y is determined by 1M, 3M, 6M and 12M LIBOR rates. Once the convexity adjustment described has been made, EURUSD futures are often used to extend zero curve. September month EURUSD futures was seen 1.1109 and 1M euro LIBOR interest rate - first rate per month- September 01-2015 - 0.05571%.