Mario Draghi, president of the European Central Bank, said the eurozone had reached a "crucial point" in its history.

European Central Bank Governor, Mario Draghi, has urged all Euro zone heads to be bold enough to make a courageous move in solving the current Euro Zone crisis. Currently, the Euro is being faced with serious threats that might lead to its collapse. There are major divisions among union members and a looming exit of Greece from the union.

Mario, the head of the ECB, has warned members of the Euro zone to take urgent measures to safeguard the union from collapsing. He warned that there has to be more economic integration if the single currency is to stay alive.

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He was speaking in Rome where he noted that this is an essential moment for the EU adding that what is required right now is a courageous leap in order to live on. Mario also noted that union leaders must take an urgent political imagination to come up with proper measures to safeguard the union.

He was also quick to comment on the unconvincing EU summit in Brussels, where officials were not effective in finding a solution for the current Euro zone crisis especially regarding the expected exit of Greece and the controversial Eurobonds.

Citigroup economists have estimated that by January 1 2013, Greece will have exited the currency union saying that by then the country will be insolvent following its failure to vote in a government that would have stuck to austerity.

Citi forecasters also noted that Greek currency would instantly fall by 60 percent against the Euro.

German Chancellor, Angela Merkel, has also stood her ground against the idea of rescuing the Euro through Eurobonds saying that it is likely to worsen the situation.

Giving a speech in Germany, Angela said that it is irrational to think that everything can be fixed with Eurobonds or any other solidarity instrument that would most likely escalate the crisis.

She was therefore seen to counter an earlier statement made by Italian Premier Mario Monti, that Eurobonds must be introduced in spite of Germany’s resistance.

Speaking to the press, Monti announced that Italy is in full support of the idea of Eurobonds and they do not expect it to take too long before the idea is implemented.

Germany has stood its ground against the idea despite its seclusion after Hollande came to power earlier this month. Hollande has joined Italy in support of Eurobonds.

Markets have continued to shrug off in force and a horrible amount of PMI statistics indicated a serious slump in the union’s private sector to almost 3 year low this month. After a week of massive sell offs, traders expected extra stimulus actions from the ECB.

The FTSE 100 increased by 1.59pc to hit 5,350.05, while Spain’s IBEX 35 slammed up 1.46pc, the CAC 40 in France climbed by 1.16pc, while the German DAX increased by 0.48pc.

Markets also received a boost after the declaration by Van Rompuy, the head of EU council, that the union supported the idea that Greece should remain in the Union.

Australian tycoon ‘is world’s richest woman’

An annual manifestation by the Weekly Business Review has revealed that Wal-Mart heiress Christy Walton is no longer the world’s wealthiest person. According to the report, the Australian tycoon, Gina Rinehart is currently the world’s richest woman.

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A sample of the revered BRW Rich 200 list that was published on Wednesday placed the Australian mining tycoon’s wealth at Aus$29.17 billion which is equivalent to US$28.48 billion. This figure has seen the Australian businesswoman outstrip Walton for once.

Two months ago, reports from Forbes put Walton’s fortune at US$25.3 billion while Rinehart’s wealth was placed at US$18 billion.

Andrew Heathcote, an editor at BRW Rich, said that the Australian Rinehart managed to triple her fortune in one year due to rise in commodity prices and the two major deals she had pulled off in ore and coal.

The editor also noted that the $18.87 billion rise in her fortune was unmatched. He also added that the increase came from her foreign investments, improved production, and increase in ore prices in the last six months.

The 58 year old Rinehart is an heiress to Australia’s largest iron ore producing empire situated in the Western part of the country. She is also regarded as a controversial personality vehemently opposed the proposed new mining taxes and has recently become a great figure in the media industry.

The mining tycoon has recently been involved in a chain of lawsuits, including the latest acrimonious conflict with her own family after she had threatened to wreck them financially.

The BRW editor also noted that Rinehart was likely to eclipse the Mexican communications tycoon, Carlos Slim whose fortunes stands at US$69 billion. He said that if the commodity prices continue to hike, Rinehart stands a chance to make more than $100 billion. He therefore concluded that it is likely for Rinehart to become not just the world’s richest woman but the world’s richest person.

It is expected that the full list of Australia’s wealthiest persons will be released on Thursday.

Find more details on GBP/USD and 5 possible scenarios.

Indicator Background

The health and activity of the UK economy is clearly reflected by the British GDP. This means that investors should focus more on this indicator since any unforeseen reading could overhaul the movement of GBP/USD pair.

GDP dropped in Q4 of 2011, shrinking by 0.2 percent, fitting the market approximation. The predictions for Q1 remain at -0.2 percent, showing further weakness in the UK economy. The question is can the index shock the markets with a better performance in May?

Reactions and levels

The pound is currently recovering from a bearish May, and it is very likely to see the free fall continue. There is a deepening recession in Europe, and increasing speculation of Greece exiting the Euro. Such events have forced investors to seek rescue from the dollar, allowing the greenback to capitalize. Therefore, the general reaction continues to be bearish on the pair towards this discharge.

5 Scenarios

1. Within expectations: -0.5 percent to 0.1 percent. GBP/USD will possibly rise within range, with limited chances to break higher.
2. Above expectations: 0.2 percent to 0.5 percent: An unforeseen higher interpretation can push the pair beyond one resistance line.
3. Well over expectations: Above 0.5 percent: Stronger reading could take GBP/USD upwards, breaking a few resistance lines.
4. Below expectations: -0.9 percent to -0.6 percent: A GDP number in bottomless negative territory might push the pair down below support level.
5. Well beneath expectations: beneath 9 percent. In this situation, the pair could split a few support levels.

The AUD/USD is merging following a crack in the support at 0.9860, which dates back to December 2011. The trend is still bearish with an indication of lower highs and lower lows. In the meantime, the force has been unrelenting, replicated by the RSI analysis remaining beneath 60 and labeling 30 all through AUD/USD’s May-turn down.

As the week kicks off, the AUD/USD is fundamentally merging within 0.98 and 0.9880 levels, even though price movement seems to be in a small congestion. The RSI analysis is not yet oversold, and it remains at an impartial ground, set for a new leg down. But in case the RSI pushes over 60, it will break the unrelenting bearish force.

In this optimistic breakout situation, correction targets the 0.9950 level, close to highs since the last consolidation zone on top of support of the consolidation region before that. Any break over 0.9950 will open afresh the 1.00-1.0020 spin around area.  In case the market breaks lower than 0.98, the most likely support will be 0.9660.

French president Francois Hollande (left) looks on as a Greek government representative (far right) shows German Chancellor Angela Merkel her place before posing for the family photo during the NATO Summit on Sunday.

A political showdown is expected in Europe on Wednesday over the need to use Eurobonds to support Euro Zone following the expected destabilizing exit of Greece from the currency union.

During the forthcoming informal meeting on Wednesday, the EU leaders are expected to agree on the best growth and financial pacts in order to strengthen recovery. But there seems to be a major rift within the union over Eurobonds which are the main proposal.

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Germany has so far declined to support a jointly lent debt saying that it can only do so if there is greater financial integration. France and the United Kingdom are demanding for the use of Eurobonds in order to raise funds to initiate growth.

Wolfgang Schaeuble, German finance minister met his French counterpart, Pierre Moscovici, in Berlin on Monday following an unconvincing G8 meeting over the weekend. They met to discuss a few issues concerning the Euro and also to try to find a common ground. Leaders at the G8 meeting agreed to help Greece remain in the currency union using different measures.

German and France have been inconsistent over the Eurobonds since Francois Hollande came to power a few weeks ago. An official from German’s finance ministry on Monday insisted that Berlin was against the use of Eurobonds.

The official also reiterated that German is outright against Eurobonds as long as there is no integration of financial policy in Europe. This discrepancy comes from fears that Eurobonds will allow weak governments to have access to cheap cash, which will in turn take the heat off governments to put into practice essential reforms.

Using a rather harsh tone, a former member of Bundesbank board of members, Thilo Sarrazin has also expressed his concerns about Eurobonds saying that they were some form of self-punishment for the atrocities of World War II.

Mr. Sarrazin has also authored a book titled: Europe Doesn’t Need the Euro. In this book, Sarrazin notes that German’s attempt to bailout the Euro was triggered by the country’s reaction that the Holocaust and the Second World War will only be agreed for after all other interests, including funds will be in Europe’s hands.

Although most world leaders are eagerly waiting for policies that may boost market confidence that Euro Zone will not collapse, Germany has continued to isolate itself.

One EU bureaucrat has noted that the debate about Eurobonds is allover and Hollande will be unanimously support by other leaders in case he brings it up. The official also added that even though it might not happen at once, there are plans to find a better way of dealing with Eurobonds.

Although attention is expected to shift to the Eurobonds, debate about growth pact will also entail Hollande’s request for more funds for the EIB so that it can invest in more infrastructures in the weaker countries that are within Euro zone to boost growth.

Germany seems to acknowledge growth pact as long as the financial pact on debt reduction is not ignored. Jörg Asmussen, Germany’s envoy on the administrative board of the ECB noted that financial pact requires to be approved immediately.

Hollande insists that there should be growth measures before he can sign the financial pact.

Mr Osborne watched the Champions League final with his German counterpart Wolfgang Schaeuble (left) last night.

George Osborne has warned that the richest Euro zone members will have to offer support to the weaker and indebted nations or else the currency union collapses.

In his report that was published in the Sunday Times, the Chancellor noted that if the wealthier nations in the Euro zone do not support the weaker ones then the union is likely going to collapse.

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Mr. Osborne also warned that the UK economy faces enormous risks if the current crisis continues.

He also noted that the British government has been busy coming up with contingency plans to tackle any eventualities as a result of the crisis.

Osborne also supported the idea of austerity plans the weak countries but also raised the idea of single Euro zone bonds and additional intervention from the European Central Bank in an attempt to counter the crisis.

Osborne went on to urge the countries facing deficit problems to face their difficulties head on adding that in case there are no supple exchange rates, the financial and political obstacles to handle the crisis will only deteriorate without help from the center of the currency union.

He also noted that the union should pursue the idea he had described last year as the remorseless logic of financial union toward greater fiscal integration and problem sharing. He said that he just stated the Eurobonds as one of the possible mechanisms.

The current French president Francois Hollande also promised to propose for Eurobonds at the next European meeting, as he puts forward his ideas regarding economic growth and support for ailing economies in the union.

Mr. Osborne was also quick to note that Europe has to be extra competitive by reforming the welfare and labor market, especially the creation of more job-friendly employment legislations, better education and low business taxes.

The Chancellor was also against calls for Britain to lower its austerity measures.

Britain is likely to face serious turmoil if it fails to make a clear distinction between a real deficit reduction policy and development plans.

German’s financial minister was today categorical about need for Greece to stick to the austerity plan made a few months ago along with its second international rescue.

He also told the press that European unity should not be seen as a one way street adding that it is very hard for one state to survive without the other. He also noted that it is possible to avoid Greek fallout from the Euro.

Although Berlin denies it, a Greek government spokesman confirmed that Chancellor Merkel brought up the topic in a phone call on Friday.

The occurrence reignited anti-Merkel attitude in debt-loaded Greece with many people accusing her of exacerbating the predicament by taking to long to act and requesting for very high austerity measures.

The chancellor’s spokeswoman denied the reports that Merkel had proposed a referendum in Greece. She however did not provide details of whatever had been conversed.  Paul Ronzheimer, a reporter at the Bild Newspaper, reported that Angela Merkel had asked the Greece president what he thought of a referendum on the currency union in a phone call.

The article’s headline read “Bild at a negotiating table in Greece”. Many are forced to believe that the reporter was there during the chat. However, the journalist confirmed that he wasn’t present but he got the details from other reliable sources.

The reporter wrote that Merkel sought to discuss with the Greece president about the likelihood of a referendum on the currency union. He also noted that the idea had come from the EU finance ministers meeting in the last couple of days.

The Bild reporter also said that Merkel sought to know Papoulias’s stand on the idea but he rejected it.

German government officials have also noted that the Chancellor hoped for a stable government in Greece after repeat voting in June. Germany has been playing a major role in an effort to rescue Greece.

Dimitris Tsiodras, Greek government orator, noted that after the phone call Merkel had specifically brought up the issue of a possible referendum on the membership of Greece in the currency union.

He also said that the German Chancellor had mentioned to the president about the idea of a referendum in line with the debate on whether Greece wishes to stay in the currency union.

These reports have sparked Greek criticism of the Chancellor who recently was cartooned in some Greek papers putting on a Nazi Uniform. The recent controversy appeared across the front page of nearly every Greek newspaper.

However, Panagiotis Pikrammenos, Greece interim Premier told reporters that the controversy is now over.

Bank of America said EU authorities will pull out the stops to keep Greece in the system as they weigh the full dangers of contagion. Should that fail, it expects a series of dramatic moves.

Major international banks are optimistic that there will be a rally and a complete rebirth in the stock market in case Greece proceeds to exit the currency union. They believe that in case of such an eventuality, global authorities will have no other option but to flood the world system with massive liquidity.

The BoA has announced that expects a severe short-term clutch in risk investments after more speculative funds slow down positions starting with a climb in tattered bank stocks along with Club Med Bonds. The bank also expects the bank to rise by 10 points to hit $1.40 against the USD following a slump to $1.20 right after the panic.

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The benign result suggests that the ECB comes in handy with enough support from the US Federal Reserve, BoJ, and other important central banks in line with 2008-2009’s concerted action.

The Bank of America insists that the EU will relinquish its limits in order to help Greece remain in the Union as they consider the real risk of contagion. In the event that the idea does not work, it anticipates a couple of dramatic actions.

The ECB plans to cut borrowing rates, give more Quantitative easing, and launch a mass stock buying program in Spain and Italy. They will also provide more capital to banks and develop a pan-European scheme of deposit securities. All these efforts are expected to have a major impact on the Euro.

David Bloom, the chief of finance at HSBC says that the crisis in the Euro is now over. He also adds that key central banks have an obligation of offering massive help, which will serve as a soothing ointment for the markets. David also noted that the Fed has its doors open for additional QE promising that a strong rally is on the way.

Mr. Bloom expressed his dissatisfaction with the way the ECB is handling this matter saying that it does not have to wait for compliance from the EUM’s wayward nations. He said that by doing so, the bank will be holding everyone right at the bottom of the deep financial pit until they call for help.

A monetary union without the burden of Greece is likely to seen as a strong bloc by the traders, but a lot depends on how Greece will fare.

Right now, the worst that can happen to the currency union is a double whammy. This can only happen if the authorities are unable to control the wide infection of the EMU and Greece finds its way out of the current crisis. This means that Greece would make profits from the devalued currency.

Bloom says that in case of such an occurrence the Euro would collapse dramatically. He is however certain that such a scenario is unlikely.

Gary Jenkins, a bond adviser has however warned that people betting on a collapse should be careful saying that world central banks are expected to flood massive liquidity that will render the LTRO a small change.

He also said that this is the time for the ECB and EU leaders to show that they are financially capable of purchasing debts on the minor market. He also noted that the situation right now is either quasi-financial union or a bust.

The bond adviser also warned that it will be fatal for the union if Greece were exited in acrimony. Such an event would cause massive losses of up to 200billion Euros for the currency union. This will in turn damage the much needed political consent to build the EU financial union and put Euro zone members together. He therefore urged the authorities to ensure that whatever they come up with is for the benefit of Greece.

Seeped out reports from Berlin propose that Germany’s treasury has created a plan that would see them rescue Greece with funds from the EU in case of a return to drachma.

Bank of America suggests that the exit of Greece from the Euro and the contagion would cause a drop of 4 points in Euro zone GDP. It also suggests that the recovery from such damages would be slow. Range for financial incentive is largely worn out. China together with the up-and-coming powers is unable to stabilize.