MORNING BRIEFING: Artillery exchange on Korean Peninsula, Irish debt boost risk aversion

What’s new:
Forex: US Dollar, safe-haven currencies rise as Ireland optimism fades
Global Markets: Tensions in Korea and Irish debt crisis hit markets
Ireland: Moody’s warns of potential “multi-notch” downgrade
Euro zone: ECB President Trichet says the euro was not at stake and has delivered as expected
Euro zone: ECB’s Liikanan is certain euro will survive the crisis
United States: US Treasuries rise on reports that North Korea fired artillery shells at South Korea

Today:


Asian Rates & Indices:
EURUSD: 1.3786 - 1.3713
USDCHF: 0.9938 – 0.9899
GBPUSD: 1.6067 - 1.5970
EURJPY: 114.95 – 114.47
USDJPY: 83.56 – 83.34
DowJones: 11'178.58 -0.22%
NASDAQ: 2'532.02 +0.55%
S & P 500: 1'197.84 -0.16%
Nikkei: 10’115.19 +0.93%
Shanghai: 2’828.28 -1.94%
Gold: $ 1'366.70
Crude Oil: $ 81.25

Comments:
    
Optimism on Ireland’s bailout quickly faded, as concerns about other peripheral euro zone members increased and Moody’s warned of the possibility of a “multi notch” downgrade for Ireland. Safe-haven currencies were boosted on Monday and the euro came under renewed pressure as the heightened concerns boosted risk aversion.

Reports of an exchange of fire on a South Korean island also contributed to a sharp increase in risk aversion towards the end of the Asian session. The dollar is up across the board, with sharp gains particularly seen against the Australian dollar, New Zealand dollar and the Japanese yen, given their geographical proximity to Korea.

The dollar is up almost 1 percent against the Aussie, 0.80 percent versus the kiwi and 0.40 percent against the yen, while against the euro, the greenback is up half a percent. 

The media reported that several people had been wounded and buildings were set ablaze, as North Korean artillery shot dozens of shells onto a South Korean island near their disputed sea border. As the media from Seoul reported this, international markets reacted, with US Treasury futures rising and US stock futures falling. Stocks and commodities also fell as a result of the Irish bailout failing to ease fears of a larger scale crisis.

Meanwhile, RTFX Trend has turned bearish on EURUSD, from 1.3627, following yesterday’s sharp drop in the most traded currency pair. RTFX TraderTip warns of an engulfing pattern, which should result in renewed bearish pressure. RTFX Asset Management Service continues its impressive run in November, with the month’s performance now at 14.61 percent, bringing the annual gross performance to a staggering 52.25 percent for 2010.

Good Day,

Emman Xuereb
Trading Desk
RTFX Ltd
Risk Disclaimer





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