Despite Angela Merkel’s claims last week that Germany was opposed to any of the member states withdrawing from the Euro zone it seems that this may now be a possibility. With increasing fears that Greece could reject the austerity programme which the EU demand, there now appears to be a ‘plan B’ to expel Greece from the Euro zone if they do not agree to the terms of the bailout.

Despite Angela Merkel’s claims last week that Germany was opposed to any of the member states withdrawing from the Euro zone it seems that this may now be a possibility. With increasing fears that Greece could reject the austerity programme which the EU demand, there now appears to be a ‘plan B’ to expel Greece from the Euro zone if they do not agree to the terms of the bailout.

Although the specifics of ‘Plan B’ currently remain confidential, it is understood to include a contingency plan which addresses the possibility of both Italy and Spain’s economies’ collapsing While some believe that Germany may find Greece’s potential departure beneficial, others, such as the UK’s former prime minister Tony Blair warn that Greece’s exit from the euro would be devastating for Germany.

Progress in Italy

Following Berlusconi’s resignation and Mario Monti’s appointment on Sunday, confidence is starting to return to the market. Monti is now working on forming a new government which intends to lead Italy out of its severe debt crisis and progress has already been witnessed with Italy selling 3bn euros ($4.2bn, £2.6bn) of new five-year bonds.

Economic data

Today we only have Industrial production from Europe, which we do not feel will have any major impact on currencies as the market has still not reverted back to fundamental data.

Date	Country	Event	Concensus	Previous
14/11/2011	EU	Industrial Production w.d.a (YoY)	3.60%	5.30%

To get a live rate and see if you can benefit from current movements in the market login to your online account or register for a RationalFX account if you are not an existing account holder.

+44 (0)20 7220 8181