Greece is the word

London: Monday 20th August 2012
Greece is the word
Greece is back in the spotlight this week with a number of high profile meetings between PM Samaras and various European leaders. Angela Merkel meets with the Greek leader on Friday; she is also due to sit down with French President Hollande the same day. Greece is seeking to prolong the timeframe of its adjustment program. For their part, Merkel's CDU seem in no mood for any further compromise – for instance, the parliamentary leader of the CDU-CSU stated over the weekend that there was no room for any more latitude, and that if Greece were to fall into bankruptcy then it would be expensive but manageable. Ahead of these meetings and discussions, the euro is simply marking time, although on Friday there was a remarkably rapid descent to below 1.23 before some buyers re-emerged. Elsewhere, the Aussie still looks a bit fragile – it recovered somewhat overnight to the 1.0450 region, but has had a few looks at the 1.04 level over the past couple of days. Tonight's RBA Minutes from the most recent meeting will be critical for the AUD in the short term. Cable is still perched around the 1.57 area, unmoved by a report from Rightmove overnight which showed that house prices dropped a further 2.4% this month after a 1.7% decline in July.

Europe remains in focus
The situation in Europe will continue to take center stage as several meetings about the eurozone's debt problems take place this week.

Attention is returning to Greece, which will ask to postpone the implementation of new austerity measures. French President François Hollande is set to meet German Chancellor Angela Merkel in Berlin on Thursday. Greek Prime Minister Antonis Samaras will meet Merkel on Friday and Hollande on Saturday.

Meanwhile, the disagreement between the European Central Bank and Germany's central bank widened. To help solve the crisis, the ECB is considering unlimited buying of bonds of eurozone countries if their borrowing costs rose over certain predetermined levels, the German magazine Der Spiegel reported. The Bundesbank, however, criticized the measures, meaning it may not support them.

European stock markets teetered Monday between small gains and losses as investors prepared for the week of discussions about the region's debt crisis ahead. Asian stocks finished mostly lower Monday, with Chinese data pointing to rising housing prices, which could prevent policy makers from cutting interest rates.

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