Eurocontinues to be pressurized

Euro remains week with the speculation that Greece may have to restructure its debt. This Greece’s debt crisis further deepened after IMF chief Dominique Straurs Kahn was arrested for sexually assaulting a housekeeper in his hotel room. Mr. Straurs Kahn had boarded a flight to Europe in order to meet the German Chancellor, Angela Merkel for discussing in detail about how Europe and the IMF would respond to the bad economic situation in Greece. He was expected to attend the monthly meeting of finance ministers from the 17 nation currency block to have a discussion about the widening debt crisis. However, he was forced to appear in a Manhattan Court. Straurs-Kahn denied the charges made against him. But the Judge did not grant him bail.

It was presumed that with Straurs-Kahn being the head of International Monetary Fund, IMF would continue to support Europe. However, with Straurs-Kahn now being gone, this situation is doubtful. This is the worst time for the International Monetory Fund to be without a forceful European leader. There are now fresh concerns over Greece’s debt issues. Presently the possibility of the situation getting resolved sounds doubtful.

Greece is moving down under a mountain of debt. It is on the verge of asking for more help from European Union and International fund. We have to hope and see the outcome of the two day meeting of EU Finance ministers in Brussels held on Monday. The summit of finance ministers is expected to discuss Greece’s bailout. The meeting will also hold discussions about whether or not it is possible to avoid Greece defaulting on its debt. Greece needs to rework on its debt situation in the coming month.

Treasury secretary, Timothy Geithner told congress officially that the US government hit the debt ceiling. He further said that he is likely retirement funds until Aug 2. This will be done in order to create room for the government for continuing to borrow in the debt markets. Tomothy Geithner also stated that as soon as the debt limit is increased, the funds will be made whole. He further said that Federal retirees and employees will be unaffected by the above mentioned actions. He urged congress once again to raise the country’s legal borrowing limit soon. According to him, this will protect the full faith and credit of the United States and it will avoid catastrophic economic consequences for citizens.

The Pound continues to be under pressure after the Bank of England brought down its growth forecast pushing back expectations for hiking the interest rate. With inflation concerns around Europe continuing to mount, all eyes will be on Wednesdays report. It is going to be with regard to Bank of England minutes, proving traders with a better overview of the committee standing situation on rates. Even though UK continues to have a sluggish growth, there will be mounting pressure on the committee as other European policy makers remain focused on addressing high rising inflation. A higher than forecasted inflation statistics is likely to be seen. You can then expect for a rate hike from the Central bank. This situation will then uplift the Sterling to a certain extent.