Global markets remain volatile

The likeliest trigger for the next stage in a deepening crisis is a blanket downgrade of eurozone government bonds, which could strip France and even Germany of their prized AAA credit rating.
The European leaders have failed to persuade investors that the euro-area government bonds were safe assets not toxic wastes, putting paid to fears that the currency zone would disintegrate.

That’s why we are seeing the single currency trading at such levels and that has made the market a risky theme form of trade as risk aversion has been performing better and bias swinging in favour of the dollar.
Several meetings were held in the run-up to the December 9, 2011 meeting. And all these meetings fell short of what was required to save the euro.
All this is not at all encouraging, dragging growth related currencies to the downside as we keep seeing bearish data in economies like China.
There is no denying the crisis in the eurozone is having an impact pushing governments all over the world to cut their growth forecasts for 2012.

From the looks of it, the eurozone is probably back in recession and signs are showing through emerging markets slowdown. Austerity alone cannot do the trick as most of the European leaders have murmured that Germany, which benefited so handsomely from the euro is asking for too much of everybody else.
The package seems to be focusing more on austerity than growth. ECB President Mario Draghi has argued that, “the monetary union cannot survive without the fiscal union and that the fiscal and currency union can help improve the scenario in Europe”.

For almost the entire trading year, fiscus issues were never addressed by leaders and that has been weighing on the euro fundamentally as governments in Europe failed to bind themselves to credible fiscal rules that provide incentives for good behaviour.
The euro is in a race against time because markets are pushing countries to insolvency as investors and voters lose faith and the task of saving the euro is growing harder.

This is a comedy of euros as we are likely to see a prompt downgrade of the entire euro-zone credit ratings affecting economic activity to the downside triggering more austerity. The euro fell to trade at US$1,2933 against the dollar and dropped against the yen to trade at 99,62 yen.
The euro weakened against the pound to trade at 83,56 pence per euro.

The Swiss franc rose against the euro as it traded at 1,2187 and also rose against the dollar to trade at 93,76 US cents.
The pound strengthened against the dollar on concern that the UK economy retail sectors improved in the month of November buoyed by the festive mood.

The pound was trading at US$1,5510. The Bank of Japan has been struggling to stem gains for the yen as we kick-start 2012.
A strong yen has walloped profits especially in the past year as it has hurt exporters. Corporate Japan is on an overseas shopping spree as Japanese firms spent about US$80 billion on some 620 firms in 2011 according to Dealogic.

It is true Japanese companies have been buying growth abroad as their economy has become more sluggish, consumption is now lacklustre, an ageing population all weighing on the Japanese economy.
Domestically their economy is finding it difficult to expand, at the same time thanks to crisis in the rich world like Europe the yen is stronger and is a buy. The yen gained against the dollar as it traded at 76,8650 ahead of that jobs report from the US due this week.

South African market
The South African rand strengthened against the dollar as it looked to cash in on the better than expected data on the festive mood. The rand gained to trade at 8,0400 against the dollar and rose to trade at 10,4389 against the euro.

Internal shocks have pushed the rand to trade better against the two major currencies the dollar and the euro.
A jobs report due this week could affect the rand to the downside as market analysts are expecting a better report from the US.
The rand could touch 8,15 to the dollar pushing investors into a better currency pair USD/CAD to reduce exposure to losses. The Canadian dollar is the best trading ground against the dollar especially on a more improved US data.

Commodities Market
Gold has dipped by 20 percent and is currently trading at US$1 589,34 an ounce as the bullion enters its bear market.
For this year investors will be looking at coloured diamonds, as these diamonds have been considered more valuable than the ordinary ones.