Forex Magnum

The euro (EUR) dropped to a two year low falling to 1.2441 from 1.2530 yesterday against the US dollar as uncertainty in the market grows. The single currency is under pressure as investors are worried Investors are now worried about the escalating problems in Spain’s banking sector while the Spanish borrowing costs rose following an auction on Tuesday. Risks of contagion to other eurozone countries remains heightened and eyes now turn to the European summit were a progress in resolving the euro zone’s debt crisis is expected. But pessimism dominated the markets as investors have doubts that any substantive action will be agreed at the summit. Cyprus was announced on Monday to be the fifth eurozone country to request financial aid as its banks have been hit by exposure to the heavily indebted Greece. Comments from German Chancellor Angela Merkel further increased risk aversion in the market after she said that Europe would not share total debt liability during her lifetime.

The US dollar (USD) strengthened against a basket of currencies on a heightened heightened risk aversion in the market. Versus the safe haven Japanese yen (JPY), the greenback fell to 79.22 from 79.78. Focus now turns to the US Durable Goods Orders and Pending Home Sales due later today.

The British pound (GBP) rose against the greenback jumping to 1.5650 from 1.5564 despite the dovish comments from the Bank of England policymakers. They said that Britain’s economic outlook has worsened due to the eurozone problems and BoE governor Mervyn King’s comments raised expectations for a new round of asset purchases next month. King said that the central bank may need to find new measures as the UK economy slipped into its second recession since the start of the financial crisis. Economic data showed that the UK public sector net borrowing increased more than expected adding to concerns about the health of the UK economy.

Oil edged slightly lower to 78.36 dollars a barrel from 79.66. Gold (XAU) slid to 1567.90 dollars an ounce from 1586.78 and against the euro it dropped to 1257.15 from 1267.20. Silver (XAG) fell to 26.79 dollars an ounce from 27.53. Stay in tune throughout the day with foreign exchange bullets!

Equities	EUROPE				US				ASIA3
	FTSE 100	-0.07%	▼		S&P 500	0.48%			NIKKEI	0.77%
	DAX	0.07%			DJIA	0.26%			HIS	1.14%
	CAC	-0.30%	▼		NASDAQ	0.63%			CSI 300	0.07%