Euro ends brief surge on downgrade fears

The euro recorded loses against its major counterparts as fears of eurozone’s core being downgraded resurfaced. The first warnings concerning France’s AAA rating appeared in early December. However, if France endures a downgrade before Germany, the fragile balance that exists – at least in political level – between the eurozone’s biggest economies will be disturbed. Adding to this, Greek PM Papademos stressed the urgency for the PSI agreement to be finalised and the need for further austerity measures, noting the alternative is to leave the euro. Versus the US dollar, the single currency gave back Monday’s gains, opening at 1.3054 and closing at 1.2930. Against the Swiss franc, the euro rose to 1.2185 from 1.2164, as SNB President Hildebrand’s wife currency trading prompted a police investigation. Investors are expected to monitor newswires throughout the day as any developments over the issue may affect the currency pair.

The US dollar rebounded against a basket of currencies after a weak start for the New Year as more positive economic data came out with Factory Orders increasing by 1.8% in November. Looking ahead today, important data concerning the labour market will be released, and they will form the basis for tomorrow’s NFP release expectations. Also, special attention will be given to the Crude Oil Inventories release at 16:00 GMT, after the EU and US appear ready to enforce the ban of Iranian oil imports.

The British pound dropped to 1.5609 from 1.5644 versus the US dollar, as the construction PMI came out better than expected one day after the manufacturing PMI print was positive as well.

Oil prices rose to 102.80 dollars a barrel from 102.64. Gold advanced to 1611.63 dollars an ounce from 1606.15. Silver moved up to 29.62 dollars an ounce from 28.158

Equities	EUROPE				US				ASIA3
	FTSE 100	-0.55%			S&P 500	1.88%			NIKKEI	-0.83%
	DAX	-0.89%			DJIA	2.31%			HIS	-0.90%
	CAC	-1.59%			NASDAQ	-0.01%			CSI 300	-0.97%

Labels: austerity measures, crude oil inventories, currency trading, economic data, fragile balance, police investigation, single currency