The euro dollar exchange rate is 0.500% higher on the day with 1 EUR = 1.4059 USD. The euro pound exchange rate is 0.211% higher with 1 EUR = 0.8797 GBP. While the euro exchange rate has gained ground against the majority of G10 currencies today clouds continue to loom on the horizon. A morning currency note from RBS say that they expect Greece to default in December this year. The note from RBS says: "Our view that Greece will have a hard default around the period of the Dec-11 IMF review is premised on: "(1) the inability to implement reform (a problem with governance); "(2) failure to meet reform and budget targets (the ambition is too aggressive); "(3) that there will be no softening of the demand from the IMF/EMU (the time has long passed when friend's loans were feasible politically); and "(4) that going back to parliament/the people to pass remedial laws to make up for missed targets will get progressively harder." Indeed, all of these factors apply to the current Sep-11 review and the scope for the Greek government to make good on missed austerity and reform targets is likely to be already too wide to bridge as an aggressive move to reform can see the politics boil over in Greece. RBS say that the only reason for suspecting that the Dec-11 review is still the more pivotal date is the idea that Greece has at least one more iteration of promises to make and policymakers have every reason to close their eyes and hope, and give the benefit of doubt until the situation is so clearly negative that nothing can be done. Perhaps this is illustrated in former German Chancellor Gerhard Schroeder's request for more leniency towards Greece.

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