In today's session we're looking at some follow through to the EU summit from December 8th in that euro zone finance ministers are coming together to try and finalize their newest contribution to the IMF which will be used to help facilitate any type of rescue endeavors by the organization.
The hope was to raise €200 billion and that other countries within the IMF including developing nations like China, Brazil, South Africa, Russia and others would also contribute some funds to help bolster any rescue efforts.
We already see that the UK is reluctant to join the effort which means that the €200 billion target is unlikely to be met and instead were looking at a contribution of €150 billion as more likely, which is likely be a disappointment to market participants.
From the Financial Times: EU officials have been trying to persuade the UK - one of the bloc's biggest economies - to pledge at least €30bn toward the effort, but David Cameron, prime minister , has repeatedly rebuffed them.
Although Downing Street supports the idea of giving the fund more resources, it would prefer to do so as part of a broader campaign under the auspices of the G20. Mr Cameron, who has suggested the UK could offer an additional £10bn, has also argued that eurozone leaders should take more decisive measures to tackle the crisis themselves rather than seeking international assistance.
At the Finance Minister meeting we are also expected to get headlines in regards to the operation of the European stability mechanism or ESM, which will be the permanent bailout fund to replace the temporary EFSF.
The key factor that needs to be decided will be how funds from the ESM will be distributed and whether it would need unanimity or would countries need to reach some percentage threshold, such as 85%, which would be significant to release funds.
Needing unanimity has created a slow and cumbersome decision making process which is cited by credit rating agencies as a concern in combating the crisis. Market participants would like to see a smoother decision-making process.
The EUR/USD traded near its open, having pared its losses from Sunday's trading after the announcement of the death of Kim Jong Il and we remain confined within a consolidation pattern following the steep declines we had in the first half of last week.