The week starts with the focus shifting back to a country we haven’t spoken about in a little bit; Greece. European politicians back from summer holidays have continued to butt heads over the prospect of further funding for the country against the imposition of further austerity.

The ECB/EU/IMF troika is in country at the moment and is due to publish its latest round of reports in the early part of September. Greece’s funding gap i.e. the difference between how much Greece spends and takes in in taxes is rumoured to have risen to EUR14bn through 2014. This is up from the original number of around EUR11bn and it is obvious that another EUR3bn of savings will not be able to be found. Greece has cut what it can and then continued.

Over the weekend Eurogroup Chair Juncker brushed off fears of a Greek exit by saying that the only time that a country would only be ejected is should they decide to refuse to implement the already prescribed austerity. Needless to say, the Germans are on the other side with Finance Minister Wolfgang Schaeuble saying that under no circumstances will there be any further funding for the country unless it meets its austerity targets. Germany has effectively cut Greece loose.

Greece has a bond redemption of EUR3.1bn due today which it’ll repay using the short term funds it borrowed last week. The irony that the funds are due to be repaid to the ECB and the funds being used are ECB funds via Greek banks is not lost on anyone and emphasises the “life support machine” dynamics of the Greek financial position.

Risk is a little bit bid this morning following rumours over the weekend that the ECB is looking to cap European Sovereign bond spreads by buying peripheral debt in a move similar to the SNB and the cap they have put on the CHF. Once again, the elephant in the room hails from Berlin and if the Germans get hot under the collar about Greek financing they would go positively bananas over this form of intervention.

Currencies have not broken any ranges in the weekend or Asian sessions and a quiet day is forecast ahead of a pick-up in data through the week.

Have a good day.

Latest exchange rates at time of writing