The broad based reduction in risk appetite has not helped matters, with heavy selling seen in the Yen crosses and Eur/Chf.
The Eur/Chf cross is another market making headlines, with the cross breaking to yet another fresh record low just shy of 1.2800 thus far. While the Japanese economy is struggling, the Swiss economy has managed to hold up much better on a relative basis, making the Franc a very attractive investment in a safe-haven environment.
Meanwhile, the Euro has been hit hard across the board, with the single currency under renewed pressure as fears over the state of the European banking system escalate. Interestingly, the Euro is even getting hit hard against higher yielders like the Aussie, despite what would normally be a higher Eur/Aud cross rate in a risk averse market. But the fact that the very source of the risk aversion has originated directly from the Eurozone makes the price action somewhat more intuitive.
Looking ahead, German current account (11.5B expected) and trade balance (13.0B expected) are due at 6:00GMT, followed by UK Halifax house prices (-0.5% expected) at 7:00GMT and UK manufacturing (0.3% expected) and industrialproduction(0.4% expected) at 8:30GMT. German industrial production (1.0% expected) then caps things off for the European calendar at 10:00GMT. US equity futures and oil prices continue to drag lower, while gold trades marginally higher.
Written by Joel Kruger
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