The U.S. dollar is broadly stronger after the European Union lowered its economic forecast, Spain lost its triple-A credit rating and the UK government announced steps to stabilize the banking system. U.S. markets are closed because of a holiday, but that hasn't stopped a flight to the U.S. dollar. The euro, pound sterling and Canadian dollar are broadly weaker. U.S. equity and fixed income markets are closed, but futures are open until 11:30 a.m. EST. The euro is down 0.0117 to 1.3149 against the U.S. dollar, up 0.0018 to 1.6510 against the Canadian dollar, up 0.0070 to 0.9085 against the pound sterling and is lower by 1.42 to 118.94 against the yen. The pound sterling is down 0.0263 to 1.4473 against the U.S. dollar and down 0.0163 to 1.8166 against the Canadian dollar. The Canadian dollar is down 0.0064 to 0.7966 against the U.S. dollar (1.2557 USD/CAD) and down 0.94 to 72.04 against the yen. UK Prime Minister Gordon Brown unveiled a series of government measures geared at stabilizing the banking system, including facilities for asset-backed securities and a change in capital requirements The Royal Bank of Scotland also said it could post an annual loss of US$41.29 billion, the largest in its history. Shares of the firm are down 10.3% in London. Cascading downgrades continue to hit the euro zone as Standard & Poor's cut Spain's sovereign debt to AA+ from triple-A. Finance Minister Pedro Solbes cautioned that Spain faces its deepest recession in fifty years. The European Commission said 2009 will be the first year its economy will contract since the introduction of the euro. They now expect 1.9% contraction compared to the previous forecast for 0.1% growth. European stock markets opened higher, but later turned negative. The Euro Stoxx 50 is down 30 points to 1976, the UK FTSE 100 is down 23 points to 4125 and the German DAX is down 29 points to 4337. U.S. equity market futures are lower with contracts on the Dow Jones Industrial Average down 53 points to 8190, the S&P 500 down 6 points to 842 and the Nasdaq down 5 points to 1192. In fixed income, returns on two-year German bonds are up 6.5 bps to 1.54%, with five-year yields up 8.8 bps to 2.29%, 10-year yields up 7.7 bps to 3.01% and 30-year yields up 3.9 bps to 3.84%. Yields on UK two-year bonds are flat at 1.61%, with five-year yields up 7.1 bps to 2.87%, 10-year yields up 10.3 bps to 3.40% and 30-year yields up 11.1 bps to 4.25%. Yields on two-year Canadian government bonds are up 3.6 bps to 1.00%, with five-year yields up 5.3 bps to 1.65%, 10-year yields up 8.1 bps to 2.71% and 30-year yields up 5.2 bps to 3.60%. WTI crude oil is down $1.62 to $40.95. The front month gold contract at the Chicago Board of Trade is up $23.40 to $840.70 per ounce.

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