Good morning. The European Union remains undecided over it\u2019s next course action, forcing global markets to behave like proverbial headless chickens. After yesterday\u2019s announcement that the next tranche of bailout package for Greece will be delayed, markets worldwide nosedived. Surprisingly however, American markets had recovered by yesterday\u2019s close. The reason? Well, FT reported that European finance ministers are looking to recapitalise their banks. Now that\u2019s smart thinking in our opinion. Greece is most likely to default despite sinking in hundreds of billions of Euros. At least the European banks that hold substantial Greek bonds will be able to survive the shock loss when Greece defaults. <\/p>\n
\u201cThere is an increasingly shared view that we need a concerted, coordinated approach in Europe while many of the elements are done in the member states,\u201d said European Commissioner for Economic Affairs Ollie Rehn to FT after the meeting of European finance ministers in Luxembourg. <\/p>\n
\u201cThere is a sense of urgency among ministers and we need to move on. Capital positions of European banks must be reinforced to provide additional safety margins and thus reduce uncertainty,\u201d he added.<\/p>\n
Let\u2019s hope they act fast. Talk is cheap.<\/p>\n
Franco-Belgian bank Dexia is in the headlines and looks set to break apart, with its debts being split into a Northern Rock-style \u2018bad bank\u2019 based in France and deposits being guaranteed by both Belgium and France.<\/p>\n
Overnight Italy suffered its second ignominy in as many weeks after Moody\u2019s cut its rating by three notches. Things are unlikely to improve soon for Rome as the political circus plays out in full sway and ringmaster Berlusconi in firm control.<\/p>\n
The economic activity gains pace with services PMI numbers from the US, UK and EU due today. The all-important US ADP job data is also due today.<\/p>\n
GBP\/EURO \u2013 1.1578
\nGBP\/US$ \u2013 1.5432
\nGBP\/CHF \u2013 1.4220
\nGBP\/CAN$ – 1.6253
\nGBP\/AUS$ \u2013 1.6141
\nGBP\/ZAR \u2013 12.5478
\nGBP\/JPY \u2013 118.41
\nGBP\/HKD \u2013 12.0182
\nGBP\/NZD \u2013 2.0254
\nGBP\/SEK \u2013 10.5872<\/p>\n