Coming Up today (all times GMT)
- GBP MPC Meeting Minues (0:830)
- USD CPI m/m (12:30)
- USD Core CPI m/m (12:30)
- USD Crude Oil Inventories (14:30)
- USD FOMC Meeting Minutes (18:00)
- JPY Prelim GDP q/q (23:50)
A sell off in the euro pairs and equities took place after Germany announced plans to curb naked-short selling of some stocks and credit default swaps. The new trading ban has probably increased concerns for investors, who will find it harder to hedge or buy insurance now against any exposures they have in the market by going short some asset classes. US equities closed lower, with the Dow down more than 1%, while the Asian session also opened in the red zone with the Nikkei lower by about 1%.
Eurodollar fell to a 4-year low around 1.2146, while paring some losses later on to reach 1.2223. Some traders say that there is a significant level around 1.2130 pushing the euro up, which is roughly the 50% Fibonacci retracement between the euros highs ever at around $.16040, and lows around $0.8223.
The pound dropped to as low as 1.4240 against the greenback, as risk aversion crept through the markets. Also, speculation that concerns of inflation would increased chances of monetary tightening, and hence jeopardizing economic recovery, also weighed on the sterling.
The precious metal dropped lower despite a falling euro and increased risk aversion. As the greenback and yen moved higher against most pairs, gold fell to as low as $1207/oz on Wednesday. Although, gold recently reached a high of nearly $1250/oz, selling pressures built up as some traders said that it was already overbought, with many investors taking profits off the table. There is a chance though, that this could be a correction, and with the euro-area fiscal problems spreading over a more longer term horizon, we could see some new bids in the very near future.