Risk appetite has started the week on a bad footing as troika talks in Washington over the weekend failed to produce any clear news or solutions for the ongoing debt crisis. Asian equity indices are trading in the red, with the Nikkei -2.2%, Hang Seng -3.2% and Shanghai Composite -1.5%. In the currency space, EURUSD has slid quickly lower throughout the session, dropping from a high of 1.3583 down to a low of 1.3363, a move that has now taken us beneath last week's lows. Adding to the unease, German Chancellor Angela Merkel said on Sunday that the situation in the Eurozone was serious, that there were no easy solutions, and that it was possible for sovereign insolvency within the Eurozone. This marks a sharp change in tone from European policymakers about the possibility of sovereign insolvency within the Eurozone - a scenario which was previously considered unthinkable.

With little official progress made on the Greece problem, press speculation has been rife as to how the negotiations may eventually play out. Greek press reports over the weekend have suggested that Germany is now pushing for a plan to restructure Greece's debt that would include an eye-watering 50% loss to bond holders and even greater budget measures demanded from the Greek government. This comes only a week after Greece's media claimed that the Greek opposition party would call for an imminent election to overthrow current PM Papandreou - an allegation that has been roundly denied.

As things stand then, the Troika is expected to return to Greece sometime next week to resume their austerity monitoring, and it is hoped that the next tranche of aid will be approved by 2 October. The economic calendar today is extremely light; with only German IFO, US new home sales and the Dallas Fed manufacturing survey to look forward to amongst the inevitable chatter and speculation surrounding Greece.