The euro (EUR) dropped to a two year low falling to 1.2515 from 1.2619 against the US dollar as uncertainty in the market grows. The single currency is under pressure as investors are worried about a problematic banking sector in the eurozone and a messy Greek exit from the euro. Economic figures from Germany further weighed on sentiment after German manufacturing data was weaker than expected. Failure by EU leaders to take decisive steps to tackle the eurozone debt crisis has curbed risk appetite, while growth in the region appears to be deteriorating. Against the Swiss franc, the single currency spiked higher to 1.2075 on rumors that the Swiss National Bank will impose a tax on deposits.

The US dollar (USD) strengthened against a basket of currencies as heightened risk aversion in the market spurred a higher demand for the safe haven currency. Versus the safe haven Japanese yen (JPY), the greenback jumped to 79.81 from 79.34. Economic figures did little to help sentiment as Durable Goods Orders failed to meet expectations raising further concerns about the global growth. Focus is now on the US Consumer Sentiment Index due later today.

The British pound (GBP) slid against the greenback falling near a 2-month low at 1.5647 from 1.5726 after data showed the UK economy is in a deeper recession than earlier estimated. UK Gross Domestic Product fell by 0.3% from an initial estimate of -0.2% raising concerns about how vulnerable the UK economy is to the eurozone debt problems. The possibility of additional quantitative easing by the Bank of England remains high given the recent fall in UK CPI inflation.

Oil edged higher to 91.50 dollars a barrel from 89.80. Gold (XAU) climbed to 1577.87 dollars an ounce from 1551.79 but later it gave up its gains to trade at 1551.12 and against the euro it rose to 1244.10 from 1241.10. Silver (XAG) rose to 28.53 dollars an ounce from 27.62. Stay in tune throughout the day with foreign exchange bullets!

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