The euro plummeted yesterday after rating agency Moody’s cut Greece’s debt by three notches and warned of a further downgrade. After the news the single currency fell as low as 1.3955 versus the dollar from 1.4035. Even though euro zone sovereign debt problems returned to haunt the euro, the single currency managed to remain firm supported by rate hike expectations. Last week, ECB President Jean Claude Trichet emphasized on inflation pressures and signaled a rate hike possibly as soon as next month. The US dollar remains under pressure against a basket of currencies today as oil and commodity prices remain at high levels. Unrest in Libya escalated and demonstrations spread to Saudi Arabia further weighing on the dollar. Saudi Arabia is the world’s largest oil producer and possible tensions in the region may push oil prices higher and the greenback lower. Against the Japanese Yen, the dollar broke below the 82 level falling as low as 81.94. Today, the pair recovered some of its losses and rose to 82.38. The Australian dollar slid against the greenback on Monday on heightened risk aversion in the market. The Aussie declined as low as 1.0089 dollars from 1.0184. Today, the pair is trading higher at 1.0131. Sterling tumbled against the euro and the dollar ahead of the Bank of England Interest rate meeting later this week. Speculators argue that the European Central Bank will increase the interest rates before the BoE putting the pound under pressure. Against the dollar, the sterling dipped as low as 1.6181 from 1.6340. The euro rose as high as 0.8635 versus the sterling. Oil prices rallied on Monday as antigovernment protests in the Arab countries continue. Oil jumped to a record high at 106.91 dollars a barrel and today it eased to 103.74. Gold prices also jumped rising as high as 1444.80 dollars an ounce as demand for safe haven assets is high.

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