Things are getting ugly. Greek ministers have raised the stakes in the ongoing battle between the Hellenic republic and their EU and IMF paymasters by suggesting for the first time in public that ‘forces’ are pushing Athens out of the Euro. The fact that Greece was likely to eventually leave the Euro was assumed by a large portion of investors and politicians, but never stated in public by officials. The latest development is interesting for the Euro because it looks like the stance of Germany and the Netherlands on Greece leaving is hardening. The Greek move looks like a bluff to force the EU’s hand and make sure the next tranche of bail-out money arrives. Bluff or not, the market has sold the Euro in a big way over the last day and a half, and from trading over 1.33 earlier this week the EURUSD briefly traded through 1.30 early this morning. The 1.30 level looks key from here on in, if we see a significant break below there looks room for further declines to the downside but it will take something big to know the pair out of recent trading range.

The Bank of England inflation report gave little away in terms of the banks plans for further QE over the coming months. As the Bank predicted inflation saw a big drop off and will gradually move back towards the two per cent target but both the Governor and Chief Economist were tight lipped over what this meant for further monetary easing. Unemployment data yesterday was slightly higher than forecast and Sterling did weaken against the Euro and Dollar in the afternoon but has found some support this morning after much better than expected consumer confidence figures overnight.

The Federal Reserve minutes, released last night, were similar to the inflation report because they gave little away about changes in the stance to ultra-low interest rates or the likelihood of QE3. The Jobs number looks to have muddied the water and the Fed looks happy to sit on their hands until a definite trend is confirmed either way. In the meantime the Dollar will continue to be dragged around by developments in the Eurozone.