The euro trended lower after political uncertainty in Greece threatened to derail austerity plans to tackle the eurozone debt crisis. The common currency traded at $1.2985, breaking the $1.30 level of support not breached since January this year.
Greece’s New Democracy leader Antonis Samaras said he failed to form a coalition government following the weekend election, passing the opportunity to Alexis Tsipras’s Syriza party. Mr Tsipras said he would forge ahead with plans to form a government of left-wing parties that would nationalise banks, repeal recent labour reforms and cancel the nation’s bailout accords. His speech sent alarm bells ringing through the financial markets, sending the euro falling below the $1.30 mark.
The result of Sunday's parliamentary election raised troubling new questions about Greece's ability to stay solvent, and indeed as part of the eurozone. A failure to put together a government this week would trigger another election in June.
Amid the political drama, Greece raised €1.3 billion in a debt auction earlier today, but its short-term borrowing costs continued to rise. It sold six-month treasury bills at an interest rate of 4.69%, compared with a 4.55% rate last month. $1.2850 looks to be the next level of support for the currency pair, and if this is breached it could target the 2012 lows of $1.2620.