European leaders create crisis of confidence

The market fears a potential Greek default as this might spark a ruin on European banks and send the global economy into another recession.
European leaders and politicians are creating a crisis of confidence in and around Europe.
Moody’s rate cut together with a potential Greek default is really stalling the euro pushing a big sell-off in the single currency.

The euro dropped 0,5 percent to trade at 102,66 yen and fell 0,1 percent against the dollar to trade at US$1,3378 from US$1,3414.
The dollar continued to weaken against the yen as it fell by 0,4 percent to 76,73 yen.
Right now the fear is Europe and what investors are making of the headlines coming out of the Eurozone.

Europe’s recovery is fragile and sovereign debt levels will keep rising. Investors have become bearish on Germany and France putting pressure on the 17 nation currency whilst leaving investors no choice to take refuge in other currencies like the dollar and the yen.
The market is aggressively selling euro against most of its 16 major trading partners.

In the London the Bank of England kept interest rates unchanged at 0,5 percent to try and boost the economy. Growth has been under performing in the UK as the Bank of England Governor described the UK situation as worse than the Great Depression.
The sterling pound tumbled against the dollar as the Bank of England injected 75 billion pounds (US$115 billion) as part of the bond buying programme as they try to ease liquidity constraints.

The pound was trading at US$1,5562 against the dollar falling 0,1 percent. The pound reversed earlier gains against the euro as it weakened 0,1 percent to trade at 85,97 pence per euro.
The British Government cuts over the years have led to an utterly stagnant economy, a very weak private sector and a poor housing market data.
Last week saw a constructive general tone on the market as positive economic data spilled through the markets from the US and Canada.

Growth related currencies like the Canadian dollar, Brazilian real, South African rand, Australian dollar and New Zealand dollar all made strides as they reversed a weeklong of losses.
The Canadian dollar strengthened on gains in positive job data from the US giving relief on all riskier assets. This job report drives a wedge between what’s happening in Europe and the US as we are seeing a lot of job creation in the US rather than businesses sitting and watching the crisis unfold in Europe.

At the moment we are seeing growth currencies retracing at a very fast pace and as long as there is positive data from the US and stability that means also stability in the emerging-markets. The Australian dollar advanced 1,1 percent to 98,33 US cents against the dollar on positive US economic reports diminished concern that recovery is faltering.
African Market

The higher-yielding assets such as the South African rand rose as a report showed employment in the world’s biggest economy rose more than forecast.
The rand regarded as a growth linked or commodity currencies was trading at 7,9150 per dollar from 7,9550 to the dollar meaning a revival in the risk appetite and when risk appetite performs better, that means

huge capital inflows are experienced as investors buy emerging market assets.
The rand, which tracks the euro, weakened to trade at 10,7211 against the euro from 10,7209.

Commodity Markets
Crude oil reversed earlier losses to trade at US$84 per barrel from US$82,97 per barrel on positive job figures coming from the US driving up demand for the commodity.
Gold was little bit lower on Friday as it recovered to jump by 1 percent to trade at US$1 651,23 an ounce.
The Japanese markets were closed on October 10 so there was no trading in Japan.