There are strong tensions observed between EU politicians ahead of the critical meeting on Thursday.
On Thursday, the heads of the European Union’s governments will be virtually meeting to discuss the introduction of so-called corona bonds. It would see the distribution of countries’ debt across the continent.
Several southern European states insist that such bonds are essential to help fund the reconstruction of their economies, following damages of the coronavirus. However, Germany, the Netherlands and other northern countries are strictly against the policy.
To avoid debt building up in the Southern countries within the block, the likes of Spain, are calling for grants - money that would be borrowed by the whole EU, but then transferred to the neediest with interest on the loans.
In terms of the monies, this is where the Northern countries somewhat understandably are not happy, they will be the ones forking over most of the cash. As the South will be the neediest and more hurt from the virus lockdowns.
What does this mean for the markets?
Should the European leaders not come to an agreement or make any progress, then expect to see downside pressure for the Euro across the board. Positive developments would, of course, be a Euro positive. In terms of EUR/USD, it can be seen trading steady, an element of caution heading into this critical meeting.
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