The start of the European session for major equity indices was horrific, as they opened with severe losses trailing their Asian counterparts. Nevertheless, we are currently witnessing attempts for rising back into the green, and the French CAC 40 indeed succeeded in trading in green, while FTSE 100 and DAX managed to limit their losses. The fears prevailing in markets over the new wave of defaults, might be triggered by Dubai thathas revived the notion that the financial crisis continues to captivate fragile markets and will impede the path to recovery that is starting to be seen across markets. Confidence crashed across markets and a massive panic selloff was witnessed, yet we can witness a sense of rationality starting to feed into the market.

Currencies are still under huge pressures from the dollar and the yen, yet after their severe decline versus those two currencies, we can see that the euro and sterling have entered a correctional wave versus the dollar and the yen, in an attempt to face the raging dollar hurricane! The yen has returned to feel the massive pressures after reaching its highestlevelin 14-years versus the dollar, where now fears intensified after Japan said that they will be consulting with their European and American counterparts over the excessive currencies movements, flagging a possible intervention.

The euro slumped versus the dollar today from 1.5018, which intensified as soon as the pair traded below the psychological 1.5000 barrier, reaching 1.4825 surrendering most of the gains it acquired against the dollar. Now the euro managed to rise again to trade above 1.4900 in an attempt to regain its lost appeal in the fragile markets.

Sterling's hemorrhage continued today as well, where we know that UK markets highlighted by FTSE and Sterling, were the first to take the hefty beating of Dubai's announced news yesterday, as UK is one of the biggest investors in Dubai markets and the properties boom that was seen in the past years, which burst with a heavy splash amid the financial crisis! Sterling declined further today from 1.6532 reaching 1.6268. The pair is currently compensating some of its acquired losses to trade around 1.6425 yet generally this week's trading are seemingly heading to a red ending for sterling versus the dollar, as UK markets will be the most affected by the revelations Dubai disclosed over the debt liabilities, and in case of their actual defaults the catastrophe might indeed paralyze UK's fragile financial sector!

The Japanese yen continued its upside rally driving the USDJPY pair lower towards 84.79 as the yen appreciated from 86.82 per dollar. The pair has now entered a correctional wave which managed to limit the dollar's losses, yet still greenback continues to trade around its weakest versus the yen since 1995!