Tuesday, 9 Nov 2010

Risk Aversion Takes off Amid European Debt Concerns

Investors abandoned their riskier positions today in droves, following renewed debt concerns in Ireland and Portugal. The euro in particular took a heavy hit, falling some 160 pips against the US dollar since early this afternoon. Currently the EUR/USD pair is trading just below the 1.3800 level. In addition, gold prices took a dramatic turn in the evening, falling close to 27 dollars. Currently gold is trading right around the 1395 level.

Tomorrow promises to be another volatile day. Traders will want to pay attention to both the US and Canadian Trade Balance reports, as well as a speech from the ECB President. Both trade balance figures are forecasted to come in negative, meaning that investor confidence may weaken further and boost the safe haven USD in afternoon trading.