Euro tumbles against dollar

rejected using its balance sheet to bolster the 440 billion euro (US$608 billion) bailout fund.
Investors should sell the euro versus the dollar, betting it will weaken to US$1,33.

The severity of the moves we are seeing is evidence that people are still focused on the headline risk as I mentioned last week.
The market is starting to get the sense of more disappointment coming out of the euro, so people are beginning to shy away from it.
This week Japan plans to spend an extra 4 trillion yen (US$52 billion) to cope with a surging yen that could damp an export-led recovery in the world’s third-largest economy, according to documents obtained by market watchers.

The yen’s appreciation of almost 6 percent this year versus the dollar has prompted the Japanese government to adopt a multi-pronged approach to currency policy.
While threatening intervention, Japanese authorities have offered aid to companies hit by the yen’s gain and highlighted the lower cost of making overseas acquisitions.
Japan imports about 80 percent of its energy needs. The Bank of Japan has intervened in the currency market three times in the past 13 months.

The dollar declined against the yen on speculation the Federal Reserve may seek further monetary easing and bets the Japanese government will struggle to stem its currency gains.
The dollar fell by 1,2 percent to 76,29 yen after it had dropped to 75,82 yen its biggest drop since August 12.
The dollar index used to track the greenback against six major US trading partners dropped by 0,4 percent to 76,276 as investors speculated that further monetary easing may debase the world’s main reserve currency.

In London the pound strengthened against the dollar after Britain’s budget deficit narrowed in September more than expected despite signs of a split among the European leaders on a plan to resolve the debt crisis drove investors to seek out safer investments.

The pound advanced by 0,8 percent to US$1,5953 after rising to US$1,5974 the highest level since September 9.
The pound’s move is also euro-zone driven and there is optimism that the sterling could move to between US$1,55 and US$1,50 over the next one-to-three months.

It may be that we do see the euro attempting to spike higher on any signs that progress is being made, any positive European news is going to see euro moving toward the top end of its trading range against the pound.

As a trader take a look at the Swiss/Yen pair(CHF/Yen). For a while traders have been short the Swiss franc and long the yen, and now it maybe time to try and square that position.
That is putting selling pressure on the yen and buying pressure on the Swiss franc.
The uncertainty in Europe remains very high, and expectations are all over the place.

The Swiss franc rose against most its major counterparts on demand for a refuge from Europe’s fiscal turmoil.
The euro depreciated 1 percent to 1,2262 Swiss francs. It declined 1,2 percent to 105,97 yen and traded at US$1,3896.

Suddenly we are seeing the so-called safe haven currency the Swiss franc getting back into the picture, because when risk aversion is low the dollar and the yen will under perform.
The Swiss National Bank imposed a ceiling of 1.20 versus the euro on Sept. 6 and resumed purchases of foreign currencies to curb the franc’s gain, which was threatening exporters. The currency had rallied 13 percent this year a day before the central bank imposed the ceiling.

South African markets
European debt crisis together with a slowdown in global growth seems to be weighing heavily on emerging market currencies.

The rand declined after the European leaders failed to come with a solution over the current debt crisis sapping demand for riskier assets. The rand was trading at 8,0234 against the dollar after it had reached 7,9924 but later tumbled to 8,0234 in Johannesburg.

The rand is susceptible to fluctuations in risk appetite. Sentiment will continue to fluctuate on headlines out of Europe until the market believes that a more sustainable solution has been found.
Commodity markets

With Gold at current levels trading US$1 647,23 an ounce that triggers a buy signal on speculation that the Federal Reserve may seek a further monetary easing which see a fall in the dollar.
The bullion will be the quickest to react as the Fed increases its money supply and the only move for gold would be up.

Gold and the US dollar are negatively related. A gold rally is being halted by a weaker euro since the euro sets the tone for commodities to move up or down.
Crude oil rose by 0,6 percent to trade at US$87,90 per barrel with the middle-east still affecting supply leaving crude oil to trade between gains and losses.