Eurozone service data was better than expected but still shows a steady decline that could force the European Central Bank to cut rates tomorrow. The ECB is expected to cut interest rates by 25 basis points but some analysts are warning that it could be a 50 basis points cut. The current European benchmark rate is 1.00 percent.
After the end of the European Summit the Euro was given a shot in the arm to recover from the Spanish bank formal bailout request. This rally was short-lived as more disappointing Eurozone economic data was released with a growing market expectation of a rate cut by the Central Bank.
Italian PM Mario Monti met Angela Merkel to discuss fiscal discipline. The biggest outcome of that meeting was the following quote from Monti:
Angela plus Mario is a step forward for European economic policy,
Merkel is facing renewed pressure at home after she is deemed to have given in to easily to the requests of the anti-austerity movement.
On that note. The troika formed by the IMF, the ECB and the EU is in Cyprus to deliver the results of the banking bailout calculation. According to Cristine Lagarde head of the IMF, Cyprus needs 10 billion euros to repair its banking system. The troika will head next to Greece with Lagarde already warning that there will be no renegotiation of bailout terms.