The next month will be a battle between political will and economics. The political will is being tested to its limit and whilst European leaders continue to insist that they want Greece to remain in the eurozone, they are continually being reminded of the economic reality that a break up of the single currency is almost certain by the likes of our Governor of the Bank of England and Prime Minister. Over the past few years this has been the problem that politicians have been unwavering in their resolve, up until more recently where the likes of Chancellor Merkel and, before he was outset by the French people, Mr Sarkozy have been at least discussing the possibility of a break up. What is becoming more apparent day by day is that the markets will simply not allow the likes of Greece to have their cake and eat it without paying.

The politicians are almost as deluded as many people in Greece who think that the rich members of the Union will simply continue throw good money after bad. If the Germans and French remain reluctant to put their money in the pockets by either using the ECB’s potential firepower or create a Eurobond, then they could be the nemesis of the single currency that they tell us they are so desperate to keep intact.

The risk aversion continues to whittle through the markets and this morning when we were earlier expecting to see the FTSE open flat to positive, it has seen the sellers come in early doors and at the time of writing the index is at 5380, down some 25 points.

Fears of a eurozone break up are building and we saw it in the debt markets yesterday where the bond yields on 10 year Spanish debt spike sharply and Italy’s yields hit 6%, although this morning they are a little lower. This is making investors even more nervous about the possibility of contagion and now we hear Spain’s Prime Minister changing his rhetoric, from one that was very much of the belief that his country will not require a bailout to one that is admitting that the spike bond yields is making it quite difficult for them to fund themselves.

In the absence of any economic data all eyes will be on some Spanish bond auctions today to see what investors will demand from the country to lend them short term cash.

The euro steadied yesterday as it became clear that the Greek public will have to go to the polls once again and essentially make their mind up about whether they will tolerate austerity and the euro or decide to go it alone with the Drachma. Also buoying the single currency were encouraging words from Angela Merkel and Mario Draghi, stating that they wanted Greece to stay in the eurozone. This morning EUR/USD remains under pressure with little signs that it wants to test the upside. At the time of writing the rate is at 1.2720 and near term support and resistance is seen at 1.2700/675 and 1.2760/815 respectively.

Gold made new lows for the year of $1527 an ounce yesterday before staging a modest bounce to close at $1540. Gold initially saw more downside pressure as Greek turmoil kept safe heaven flows going into the dollar, but FOMC minutes hinted that Fed members were becoming more open to another round of easing given the state of the global economy, sending the dollar down and gold up.

The price of oil continued its downward trajectory as trader’s factor in further surprise supply increases and how slowing global economic activity will diminish demand. US crude oil declined as inventories increased by 2.1 million barrels against an expectation of only 1.4 million barrels.