In US trade, the euro drifted below the psychological support level of 1.30 before recovering, as uncertainty over the Greece’s position within the euro was offset by a much stronger-than-expected German Industrial production print.
The uncertainty about the next government in Greece continued with Tsipras' radical left party still unable to find enough support to form a left-led coalition. Tsipras still has two more days to garner a majority backing before the baton gets passed. If no party grouping is able to claim a majority by May 15, the President could ask the parties to agree to a caretaker government ahead of fresh elections.
The situation is clearly a debacle, and the longer it drags on the worse it will be for both Europe and Greece, the latter of which still has to receive Troika sign-off for the next tranche of its aid package. On a more positive note, Germany’s March industrial production rose significantly more than expected to 2.8% month-on-month versus a consensus gain of 0.8% consensus. This is the biggest jump since July 2011 and one of the strongest month-on-month numbers since records began, which suggests the IFO was 'right' and the PMI 'wrong', since there was an unusual divergence between the two series with the IFO pointing up and the PMIs down.
Also helping support the euro were some comments from the ECB's Jorg Asmussen who said he would expect France to continue to ’abide by the fiscal compact‘ and that ’any growth elements should not weaken the compact‘. Speaking on the issue of Greece, Asmussen said ’there is no alternative to agreed reforms for Greece to stay in the eurozone‘. Having ended yesterday’s Australian trade around the 1.3035 level, the euro hit a US session low of 1.2983, before recovering to close at 1.3005. Upon reopening for the Asian session, the euro has once again dipped below to be currently trading in the mid-1.2980s.