By TraderVox.com
Tradervox (Dublin) – Risk aversion has grappled the global financial markets sending the growth related currencies and the Euro to the bearish zone. The major indices in the Europe and the Asia are also in the red with a sharp selling seen in the Greek and the French markets. The major gainers today are the US dollar and the Japanese yen. The commodity space remains red with a sharp fall in the crude prices. The selling in the crude began early in the week with the major suppliers citing that the crude supply is going to rise on increased production and yesterdays reports of US crude inventories adding more capacity.
The safe haven gold which saw huge demand in the past during uncertain times is continuing its bearish rally which started last month. This has raised the prospects of the dollar as a safe haven and the dollar index is at monthly highs of 79.60
The dollar has seen significant inflows from the opening trades of the week on the back of the Greek and the French election results. The Greek elections have brought anti austerity parties to power. This has led to speculation regarding the willingness of the future Greek government to implement tough austerity measures for the country to get the next tranche of aid from IMF and the EU. This has raised the probability of a Greek exit and has fuelled concerns of a major global economic crisis worse than the one in 2008 due to the collapse of the US investment bank giant Lehman Brothers.
Another concern in the Europe is the end of the Merkozy era. German Chancellor Angela Merkel and the French President Nicolas Sarkozy were the key promoters of austerity measures in the Europe. The new French president François Hollande is in favor of growth initiatives rather than austerity measures. This has raised doubts over the future of the fiscal measures agreed earlier on the austerity plan.
The dollar is posting gains against major pairs except the Japanese yen. The inflows can be attributed to the safe haven flows into US treasury notes, the US dollar and the also the US growth story which is showing signs of slow recovery with declining unemployment rate and improving GDP numbers.
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