Euro plummets on pigs worries

A number of negative factors have meant risk aversion has come back with a vengeance. Euro plummets on pigs worriesAs usual the eurozone is under the spot light and last week’s European Union (EU) rescue agreement has failed to prevent a further widening in eurozone peripheral bond spreads.

This will be disappointing to eurozone officials as this was the main ambition of their latest deal. The deal struck by EU officials has failed to avoid a leap in Italian and Spanish bond yields.

Furthermore news that MF Global has filed for bankruptcy while the Greek PM has called for a referendum on the EU’s debt deal dealt markets a blow overnight.

As the plans announced last week didn’t really contain any concrete details over the workings of the package this has left traders questioning the ability of this latest deal.

The single European currency has lost a considerable amount of its gains from last week as various doubts about the eurozone rescue package have come to a head.

As worries had been spreading due to the lack of detail in the rescue package, including but not limited to the lack of details regarding the leveraging of the EFSF bailout fund.

The trend appears to have followed the reaction to previous EU announcements to stem the crisis, namely short lived euphoria followed by a sell off in risk assets.

The EUR is likely to struggle further over the near term, with the current pull back likely to extend and breach through 1.37.

So far today we had UK GDP which came out slightly better than expected at 0.5% q/q and y/y against a median forecast of 0.4% respectively.

Despite the positive number a weak PMI figure of 47.4 against the forecasted figure of 50 (worst since June 2009) has pushed cable lower and currently sits at 1.5931.

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