Price action in early week quite subdued despite ongoing fear and uncertainty Gold trades to yet another record high; inches nearer to major barriers China starting to express concern over euro zone debt crisis Moody’s issues warning against seeking collateral for aid to Greece Euro reaches apex of major multi-week triangle formation Price action in the early week has been quite subdued and all major currencies seem content on trading within a well defined consolidation. However, this quiet consolidation should not be taken for a dismissal of underlying fear and uncertainty over the outlook for the global economy, and markets still remain quite vulnerable to severe bouts of risk liquidation. If there is one market which is sending this message loud and clear, it is certainly the gold market, with the yellow metal surging to yet another record high and inching even closer to major psychological barriers at $2000. We are actually quite surprised to see markets so quiet this week, with the tight trading range in the Euro of particular interest. Two major stories hit the wires on Monday and neither story was able to gain any real traction despite the suggested Euro negative implications. The first story came out of China where Reuters quoted China’s Peoples Daily as saying that “theblack death-like spread of the euro zone’s sovereign debt crisis endangered China’s exports to the euro zone.”Although China’s holdings of Euro reserves were significantly less than those of their US Dollar reserves, the article went on to explain that the “Euro debt crisis would lead to adecline in real demand that would have a far-reaching impact on the country's real economy."This is significant as it is the first time we are hearing Euro negative banter out of China. The second story which failed to gain traction and could also be equally as Euro bearish came out of the euro zone itself with Moody’s issuing a warning that euro zone states should think twice about seeking collateral for aid to Greece if they had any desire for the bailout to stay on track. Greece is simply not in a position to b able to offer collateral for its loans and any requests for such collateral will significantly delay and even threaten the broader euro zone recovery process. As we have already outlined, both of these stories have failed to have any real market moving influence and we will continue to keep a close watch to see if investors eventually do respond to the developments. Technically, the Euro has reached the apex of a multi-week and multi-month triangle and a major breakout is to be expected at any moment. Should these stories actually gain traction, the breakout could very well be to the downside. Key short-term technical support comes in by 1.4255 and a break below could act as the catalyst.

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