EUR/USD: Collapsed yesterday after the German bond auctioned failed to uplift investors’ concerns regarding the euro zone debt crisis. The currency pair opened on Wednesday morning at 1.3504, initially jumped up 25 pips before distress struck the markets sending the EUR/USD down to 1.3320, a loss of over 200 pips. The decline was attributed to many aspects; first the German announcement of weaker Flash Manufacturing PMI figures, followed by talks of the Dexia deal falling apart. Further negative euro zone data was announced adding to the matter, as well as talks that the Currency Settlement System will be running stress tests to determine the possibility of breaking up the euro. The main focus of investors was the "disastrous" outcome of the German bond auction, which sent the euro down to lows of 1.3320. The auction proved that even Europe’s largest economy is having trouble raising funds as their yields increased. Investors fear that if Germany has to increase their cost of borrowing, chances are that the euro zone debt crisis is far from over. The EUR/USD opened slightly higher this morning in Asia at 1.3385 due to market participants’ short covering and has continued to trade above the open, currently trading at 1.3393. Markets are closed in the US today due to the Thanksgiving holiday and as a result markets may be quite thin. Investors feel it may be safer to remain on the side lines as market uncertainty continues to loom. GBP/USD: Followed the same pattern as the euro yesterday as the news regarding the outcome of the poor German bond auction hit the market. It opened at 1.5632 and tracked up to 1.5655 due to the MPC minutes announcement that the UK does not see the need in further Monetary Stimulus just yet despite the expected decline in GDP. It wasn’t long before GBP/USD shed 160 pips and dropped to a low of 1.5495 on the back of the disappointing German bond auction. Risk aversion struck the markets from that point onwards leading investors to dollar buying as a safe haven. The sterling has managed to hold its own against the dollar this morning as it opened at 1.5522 and has traded up to 1.557. Analysts’ outlook for the sterling is still deteriorating as they fear another recession is close at hand. USD/JPY: Opened yesterday’s trading session at 76.95 and gradually traded higher throughout the day to an intraday high of 77.57. The currency pair was lifted by the increased risk aversion following Standard & Poor’s announcement that it may downgrade Japan’s credit rating. Standard & Poor’s further cited the deterioration of Japan’s public finances. Standard & Poor’s currently rates Japan at AA- and has had a negative outlook on the rating since April. The USD/JPY commenced trading today at 77.30 in Asia and has since declined to trade at a low of 77.00 and is currently recovering some of its losses trading marginally higher at 77.10. The currency pair lost momentum this morning ahead of the German IFO Business Climate report which is forecast to show that business confidence fell for a fifth consecutive month. This enhanced the appeal of the Japanese currency as a safe-haven asset. The USD/JPY could take further direction from euro zone announcements or possible credit rating statements on Japan’s economic outlook. US financial markets are closed today in respect of the national Thanksgiving Day holiday. USD/CHF: Started trading yesterday at 0.9140 and strengthened as the day unfolded to later reach its intraday high of 0.9212. Risk aversion heightened in markets as the euro zone debt crisis further worsened on Wednesday. This came following the extremely poor outcome of the government bond auction held in Germany which revealed very low demand of the 10-year bonds. In Greece, the nation’s central bank issued a warning on Wednesday that unless the new government hastens to implement debt-reduction reforms, the country will be obliged to leave the euro zone. There were no economic reports to come from Switzerland yesterday and none are expected today. US markets will be closed for the national holiday. The USD/CHF opened today’s session at 0.9195 and has since traded to a low of 0.9175. The currency pair may take further direction reliant on market sentiment ahead of today’s trading. Commodities Oil: Crude oil opened yesterday at 97.85 and quickly dropped by 130 pips during the early Asian session. The commodity followed a downtrend to the support level of 95.35, as market pessimism dominated markets following disappointed economic data from China, Europe, and the United States, which weighed down on confidence and provided crude oil prices with a strong bearish momentum. Prices retraced by 140 pips during the US session as crude oil inventories declined significantly last week. Nevertheless, investors’ attention remained focused on the slowing global growth following the disastrous German bond auction and on a US dollar, currently at its highest level in seven weeks. The commodity closed with an overall 208 pips loss. It opened today at 95.79 and is currently trading 45 pips higher than the open price. Traders will be looking for the German business climate at 09:00 GMT and UK’s revised GDP at 09:30 GMT but prices are expected to trade within a limited range, since US markets are celebrating Thanksgiving today. Gold: Gold opened yesterday at 1697. The commodity rose during the Asian session to the resistance level of 1710 before losing ground during London’s session, dropping over 320 pips to 1677. Indeed, rising Italian and Spanish bonds combined with a weak German bond action triggered a wave of risk aversion, which eventually propelled US dollar prices to its highest level in seven weeks, and provided gold prices with a strong bearish momentum. The previous metal retraced over 220 pips during the US session to close the day with an overall 60 pips loss. It opened today at 1691 and is currently trading 40 pips higher than the open price. US markets are closed today for Thanksgiving bank holiday turning attention to the German and UK’ data to be announced today, respectively released at 09:00 and 09:30 GMT. Trading Central’s technical outlook remains bearish for today, as gold prices could remain under pressure if the US dollar extends its previous day’s gains.

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