Greece deal temporary solution; not to help euro: JPMorgan

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James Glassman, senior economist at JP Morgan Chase Bank says that a Greek resolution is not really positive for the euro because it doesn't really solve the real problem for Europe.

"Despite the European crisis, the euro has not really been that weak, so I would be surprised if we see much of reaction here because anything that comes out of these negotiations isn't really that positive for the broader economy," he said. He further adds that he doesn't expect the euro to move much as compared to other currencies.

Below is an edited transcript of his interview. Also watch the accompanying video.

Q: How do you expect the developed markets to react to what's happened overnight at Brussels?

A: This has been the process in recent days and there is so much at stake here for both sides. The truth is that everybody realises that if they don't find a way to get through this second bailout, it's going to take years for anyone to know whether Greece is going to be able to change direction and reform their economies to stay in the family.

We assume that they will find a way to come up with a rescue package, because should it fail, the next danger is that there would probably be broader contagion that would start to make people worry about the sustainability of Italian and the Spanish situation. So it's messy and it's not known yet, but I think there is enough energy going into it and enough at stake for both sides. The markets are assuming we will see a favorable conclusion before the funds that are coming due for Greece, and I think the market is right to be optimistic that this somehow will find a favorable resolution.

Q: So you don't expect a sell off given the run up that we have seen?

A: There is always a risk, but the truth is there is crisis around Greece that's really been holding the market back a fair amount. The news has been getting better, central banks seems to be responding more aggressively, so while it's true that the reality may prove to be disappointing, the truth is there is enough to be focused on for global economies slowly coming back.

The fear was that the Greek situation could turn into something much bigger, much worse and with that danger passing, it's probably unlikely that the market is going to be disappointed at the end of the day by what everybody expects will be a favorable resolution.

Q: What does this mean for the currency space? We have seen the euro strengthening quite a bit. What kind of levels are you seeing on the euro while this uncertainty drags on?

A: I don't know why a resolution on this round is a positive for the market, for the euro because it buys time but it doesn't really solve the real problem for Europe. The truth is the mystery to a lot of people has been despite the European crisis the euro has not really been that weak. So a lot of the crisis has been reflected in internal flight of capital. Money coming out of Spain, Italy, Greece, going back to Germany over north.

So I would be surprised if we see much of reaction here because anything that comes out of these negotiations isn't really that positive for the broader economy. So I doubt we are going to see much of a move in the euro currency relative to the rest of the world.