Market Brief
After the early drama of gold's $50 plunge down to $1137.86 lows, risk appetite has recovered strongly thanks to European equities rallying into positive territory on the day; in turn helping US indices to recoup ground and sending the USD lower against most major currencies. The turnaround comes after a statement from Dubai's Chairman of the Supreme Fiscal Committee started to gain some traction in the market; a statement which confirmed that the Dubai government intended to directly intervene and manage the debt restructuring of Dubai World. EURUSD has been on a dramatic round trip from 1.5020 highs down to 1.4828 this morning (just below the 100 day moving average but above major 1.4800 support), and since the recovery in equity markets the pair has traded back up to 1.4990 levels. Gold too has rebounded strongly back above $1175, but is still down over 1% on the day - underscoring the large volatility and precarious nature of trading this rally.

The morning data releases were largely overshadowed by broader risk appetite driven moves, however the first significant releases of the day were Swedish GDP and Retail Sales. The Q3 GDP figures missed forecasts with a 0.2% QoQ expansion against expectations for a 0.6% rate of growth, but Retail Sales figures convincingly beat forecasts with a 1.5% MoM increase in October against estimates of 0.5%. The SEK strengthened against the EUR after the releases; taking out 10.4450 support to touch 10.4100, and has since held onto its gains well. Eurozone Economic and Industrial Confidence indicators followed up later in the European morning but were exactly in line with forecasts (at -17 and -19 respectively), and FX markets were completely unmoved on the releases.

It seems that for now, the Dubai debt crisis has distracted markets from the growing concerns surrounding Greece's own sovereign debt problems; however we feel the dismal and deteriorating state of Greek public finances will not be easily swept under the carpet and forgotten. With the spread between Greek government bonds and German government bonds soaring, and CDS premiums on Greek sovereign bonds climbing to more than double levels in early August (above 200bps), there are significant warning signs emerging that the financial crisis is far from concluded.

Currency Tech
EURUSD
R 2: 1.5200
R 1: 1.5100
CURRENT: 1.4970
S 1: 1.4800
S 2: 1.4626

GBPUSD
R 2: 1.7040
R 1: 1.6845
CURRENT: 1.6505
S 1: 1.6459
S 2: 1.6272

USDJPY
R 2: 90.60
R 1: 88.20
CURRENT: 86.95
S 1: 86.30
S 2: 83.60

AUDUSD
R 2: 0.9406
R 1: 0.9335
CURRENT: 0.9080
S 1: 0.8910
S 2: 0.8570

USDCAD
R 2: 1.0785
R 1: 1.0735
CURRENT: 1.0630
S 1: 1.0450
S 2: 1.0370