The UAE government is not insuring Dubai's creditors' rights, that was the latest revelation from a government official! The comments sent a new wave of skepticism in the market as investors waited the destiny for the $59 billion of liabilities on Dubai World, which is already owned by the government, and there by making them sovereign debt for the Sheikhdom! We can see that European indices tilted again to the downside following the morning acquired gains as woes resurfaced in the market. Adding to that, the Canadian GDP missed estimates and added more downbeat pressures after the economy only expanded by 0.4% opposed to 1.0% projected!

No one knows what is coming next, and among optimism and pessimism, caution is prevailing markets as investors eye the developments across currencies and equity markets as they devote the attention to news from Dubai, especially with the lack of major fundamentals from the U.S economy today.

This anticipation and caution has pressured currencies to stabilize at least and trade sideways with downside tendencies versus greenback; yet clear discrepancy has been seen in majors' performance versus the dollar depending on the economic developments seen in correlation to the dollar's exchange rates.

The euro declined steadily and slightly versus the dollar today, after it managed to set its highest at 1.5083, yet till now, we can see that the pair stabilized above 1.50 barrier after it settled for the lowest set at 1.4961 during the early Asian session. The more than expected rise in annual CPI inflation has increased the bets over a soon to be reversal in monetary policies by the ECB, especially as they hinted that they might start withdrawing the unorthodox measures which is to be the start of the gradual reversal to contractionary monetary policies, which surely will favor the euro for further gains; that supported the euro in stabilizing despite the negative pressures and trading steady above the focal support at 1.4990.

Sterling was surely not as lucky, especially with the renewed woes over the Dubai ordeal. Adding to that, the data today reflected the continued weakness in lending across the Kingdom despite the signs of stability in the housing sector. Sterling continues to trade near its lowest set today at 1.6453, as it was pressured by a selling wave to take it down from the highest recorded at 1.6591. The pair is trading below 1.6680-1.6591 which diminished its bullish momentum and breaching 1.6515 accelerated the downside move which is expected to continue amid the prevailing fears in the market.

Amid the dollar's strength, we can see that the despite the gains it acquired against other majors, the yen finally surrendered its gains to the dollar. The pair managed to rise in the last three hours from 86.13 to trade currently above 86.50, yet till now the trading range that was set in the Asian session among 85.84 and 87.03 remains intact.

Sings of a positive bullish pattern are seen for the pair, which might power the dollar to extend its gains, yet in general, we can not bet on the dollar's strength versus the yen as far as trading is below 88.00, which is the most critical level over short term basis.