European sovereign debt crisis is reshaping the political scene in the EU. Last week, France elected a socialist president, whose platform included a revision of previously agreed upon fiscal austerity measures. Euro has depreciated 1.28% against the US Dollar since then.
People’s discontent with harsh economic measures was witnessed across the Europe last week: indignados demonstration in Madrid, attacks against tax authorities in Italy and parliamentary crisis in Greece. Even Germany is not prone, where recent elections indicate that Angela Merkel’s agenda is losing popular vote.
As talks to form a new Greek government failed, Asian markets were first to responded on Monday, May 14 session , but regained some of their losses after the release from the People’s Bank of China – which announced more monetary easing by cutting banks’ reserve requirement ratios.
Greece once again is a center of attention. As prospects of coalition are vaporizing, the scenario of country’s exodus from euro zone will be the key factor for market sentiment in the upcoming week.