good read and here we go AGAIN~~~~European markets plunge on concerns about Italy
Wed, Nov 09 2011, 10:57 GMT | FXstreet.com
FXstreet.com (Barcelona) - European markets opened with gains on Wednesday although the appetite for risk was short lived and the main indexed plummeted into red after Italian 10-year bond yields surged to fresh all-time highs, showing that Berlusconi's vow to resign has not been enough to ease fears.
Eurostoxx 50 Index drops 1.85%, while the German DAX Index falls 1.8% and the French CAC Index sheds 1.4%. In the UK, the FTSE Index trades 1.1% lower.
Yesterday's optimism about Berlusconi's resignation has turned into fear on Wednesday with investors concerned about the uncertain situation opening as Berlusconi departs. As a consequence, Italian borrowing costs have rallied to fresh Post-Euro highs again, with the 10-year bond yields at 6.76%.
In the macroeconomic front UK trade deficit figures have added reasons for concern. UK trade gap rose to a record high at GBP 9.8B in September, well above the market consensus, that called for a GBP 8.0B deficit. Besides, August trade gap has been revised to GBP 8.6 B, from the previously estimated GBP 7.6 B.
Euro and Pound plummeting
EUR/USD rebound from 1.3600 low on Monday was capped at 1.3860 high during Asian session, and the pair retreated to 1.3800, to accelerate its reversal on European session dropping to fresh one-week lows at 1.3655 so far.
GBP/USD recovery from last week lows at 1.5875 peaked on Tuesday at 1.6130, and the pair accelerated its retreat, following grim UK trade balance figures, returning below 1.6000 to revisit week low at 1.5980.
USD/JPY decline from 78.00 area on Tuesday has been contained at 77.55, and the pair has picked up slightly on European session, supported by generalized Dollar strength, although bulls remain capped below 77.75, previous post-intervention low.
