EURUSD

EUR

Targets: EURUSD 1m 1.40, 3m 1.35 Bundesbank President and ECB member Weidmann said he takes German peoples' worries about the euro seriously and that there is a danger that people will lose trust in institutions which try to solve the crisis. He added that his biggest worry is that measures taken so far shift the framework in a direction that is not sustainable in the long term. As such he said that planned EFSF purchases could weaken incentives for appropriate fiscal policy and that joint euro bonds are not needed. He added that he favours the ECB stopping bond purchases as these pose considerable risks to the Eurosystem. Austrian economic minister Mitterlehner said on Greek insolvency, everyone must evaluate all possibilities and calculate consequences. He added that this does not mean that the calculated scenario is the preferred option. Clearly the rhetoric has changed in recent weeks from the likes of Germany and Austria and they are beginning to asses the consequences. German Chancellor Merkel and French President Sarkozy will hold a call with Greek PM Papandreou on Wednesday afternoon. Dow Jones wires reported the Dutch Finance Ministry expected Greece to default. This was later denied though the ministry noted that it was a scenario being looked at. Fitch reported that Spain would find meeting its GDP target 'challenging as the region's deficits would put pressure on the central government. It warned that risks to the country's rating are 'clearly on the downside'. Belgium's parliament has approved the second Greece Bailout, though many other governments and parliaments are yet confirm the July 21st agreements. The IMF noted that Portugal's fiscal overhaul is 'broadly on track', but there is still a need to reduce waste and tighten spending controls. The fund stated any delayed fiscal implementation would undermine confidence in the current program. US Secretary Timothy Geithner has confirmed his presence at the upcoming European Union Finance Ministers' gathering in Poland. However, he denied that the US will urge a larger EFSF, contrary to earlier reports.