EUR/USD Falls With A Gap As Greek Deal About to Collapse

Eurodollar started the week lower than it closed on Friday, as there are worries about the Greek deal, among other signs. Update on everything that happened in a very busy weekend – things that are now weighing on the pair.

In Luxembourg

There is a report by Der Spiegel that the compromises made by Germany on Friday at the Sarkozy-Merkel summit regarding accepting only “voluntary” private sector participation are history:

A German compromise plan to resolve a dispute with the European Central Bank over the Greek rescue that was reported by Der Spiegel magazine is no longer on the table, a government source said Sunday.

The second emergency meeting that is still going on late on Sunday is finding it hard to reach an agreement on Greece. Perhaps only half of the upcoming trance will be approved.

In Athens

This joins the announcement that the Greek prime minister made in Athens, about a referendum for reforms in the autumn, when Greece is expected to receive the next tranche of aid:

Papandreou isn’t certain that he’ll pass the vote of confidence on Tuesday: Demonstrations don’t stop in Athens and this has an impact on some members of parliament. This move shows his uncertainty.

Protests continue in Athens, right in front of the parliament that will have a vote of confidence on Tuesday.

The Greek bank run now continues.

In Britain

And this joins the talk that British banks are abandoning the euro zone:

Senior sources have revealed that leading banks, including Barclays and Standard Chartered, have radically reduced the amount of unsecured lending they are prepared to make available to eurozone banks, raising the prospect of a new credit crunch for the European banking system.

Heavy strikes are planned in Britain for June 30th.

In Spain

• Public debt has reached a 13 year high.
• The Spanish banks are heavily relying on the ECB, especially now, in May.
• Over a quarter of a million took to the streets on Sunday, opposing the austerity measures.

In Forex

The Euro opens lower, now at 1.4275 in thin and early trade. The moves can accelerate when Tokyo and London open.

For more about EUR/USD, see the euro to dollar forecast.