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The political crisis in Greece continues to damage the Euro

The political crisis in Greece continues to damage the EuroThe political insecurity in Greece is the main cause for the Euro to be traded at three months and a half lowest against the dollar. The current situation in the country also threatens EU’s rescue plan and increases the possibility of Greece exiting the union any day now. 

Analysts are voicing their fears of another euro debt crisis, after the apparently false sense of stability from the previous months. Even strong currencies such as the Australian dollar might be prone to the effects of the crisis.   

On the global markets, talks about Greece exiting the Union are becoming more serious, which might bring a new range of the Euro currency, which will be under 1.30. It has already fallen to 1.2911 against the Dollar, on Wednesday. The rate EUR / JPY is 103.15 and is near the three-month low of 102.76.

The leader of the Left in Greece Alexis Tsipras failed in his attempt to form a government, which put Socialist leader Evangelos Venizelos in a position to make a final attempt to form a government today.

The chances of forming any coalition government, however, are quite slim, after the two unsuccessful attempts. This means that the most probable result will be new elections within three to four weeks. Given that Athens would be without money in June, the eventual new elections would be crucial for Greece, as international lenders refuse to renegotiate loan terms, which in turn Greek voters want.

Due to the recent problems in the euro area, added to the modest growth in the U.S. and China, traders favor secure currencies as the yen.

The pound recovered from 2-week low against the dollar Wednesday at 1.6067 before the decision of the Bank of England later today. In the morning the UK currency exchanged for 1.6135. Most experts expect the bank to keep interest rates unchanged, as well as quantitative easing to 325 billion pounds.

After three straight sessions of reduction in prices Gold still has difficulties to rise. Investors are nervous because of the political situation in Greece and the problems of the banking sector in Spain. The spot price is 1592 dollars an ounce at 4-month low yesterday of 1579.30 dollars.

Nevertheless, the EU governments continues to maintain the solvency of Greece and yesterday was approved a payment of 5.2 billion euros of funds for emergency aid, despite the opposition of some members of the euro area after the election results in Greece.

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