Updated on: 08-08-2011
Fear Prevails in Financial Markets as Bloodbath continues
S&P's move to cut US debt rating sent waves of horror in all markets. It seems like only the gold, the franc and the yen are main beneficiaries of the move.
This week the FOMC will decide on the U.S. interest rate and may provide some help to the markets. The SNB, BOJ and ECB acted the previous week. Now Fed's turn. Will they help?
Majors
EUR/USD
S&P move caused a gap of 120 pips in the pair at the open. The gap was almost closed after three hours, bit then the pair moved a bit higher. The greenback lost some of its safe haven appeal in the wake of S&P downgrade.
Yesterday an emergency Governing Council conference of the ECB took place in Frankfurt. Trichet, the president of the bank, signaled they were ready to buy Italian and Spanish bonds. This certainly pushed the EUR higher.
USD/JPY
Majority of intervention gains erased. What will BOJ do?
USD/CHF
Not only all CHF losses after SNB move were retraced, but also the pair is now even lower than it was before intervention. Nothing seems to work. If I were the Swiss National Bank, I would… Well, send them your recommendations on how to deal with their surging currency, since they seem "clueless".
AUD/USD
The Aussie tends to tumble when fear prevails. No exception this time. 4 months low reached. The Royal Bank of Australia lowered the growth forecast of the island, contributing to the fall.
Commodities
GOLD
S&P's move sent the gold soaring to $1715. "The gold is off the chain and still running", said a metals analyst this morning.
Economic Data
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