Euro continues to remain weak as European markets opened; its downside will probably stay firm at least until the European Summit in Brussels this weekend.
As long as European leaders remain divided over how to increase the firepower of the region’s bailout fund, known as the European Financial Stability Facility (EFSF), market sentiment will remain subdued.
Investors are unwilling to take large positions on the euro at the moment as they are doubtful if the European leaders can really move forward with the rescue fund.
Yesterday French President Nicolas Sarkozy said that plans to tackle the euro zone debt crisis have stalled with Paris and Berlin at odds over bolstering the EFSF’s 440 billion euro fund.
Merkel and Sarkozy met at an emergency meeting in Frankfurt for a pre-summit discussion to try and break the deadlock but with no official statement made after their meeting, we are left to assume that no progress was made.
The focus turns to the Summit in Brussels this weekend with hopes that policy makers will make some steps to end the crisis that began in Greece two years ago this week. Meanwhile, in Athens, protesters are demonstrating outside the Greek Parliament since yesterday, while the government is undergoing a vote on a new austerity package that will help Greece be approved for the next bailout.
Greek Prime Minister George Papandreou won a preliminary vote last night, with the final vote scheduled for later today.