Is this the final curtain call for Greece?

European leaders did manage to agree on a much needed bank recapitalisation package worth EUR108bn over the weekend, aimed at restoring confidence on battered European lenders, but there is still no agreement on how to expand the firepower of the EFSF. Wednesday’s deadline is approaching rapidly, so German Chancellor Angela Merkel and French President Nicolas Sarkozy instead of just getting on with it, think it better to use the deadline as political ammo to force Italy into further reforms. The final pillar of the three pronged attempt to finally stem the crisis, the size and scope of haircuts of Greek debt, is also yet to be agreed. Given that two of the three pillars are still in negotiation, you might expect the uncertainty over a resolution to be Euro negative. However the single currency has started the week of the front foot pushing over 1.39 against the Dollar and we look set for stock markets around the globe to rise as well.

There are large amounts of US data due this week, including consumer confidence, Durable goods orders and GDP being the highlights. No major surprises to wither the upside or downside are expected and the overall picture is expected to show the US economy struggling along in the zone where the Fed is loathed to act decisively either way. For the US Dollar the risk aversion that gave the greenback such a boost in September seems to be subsiding.

Sterling will take a back seat this week with very little new data of note out over the course of the week. The only thing on note is consumer confidence, expected to be grim given the continued squeeze of the consumer by inflation and stalling wage increases.