• The euro edged lower on signs the eurozone debt crisis is spreading to more European countries after another surge in government bond yields. The European Central Bank stepped in the bond market yesterday to buy Italian bonds and the 10-year bond yield fell briefly but later jumped back above 7%. Attention shifts to the Spanish and French government bond auctions later today and the result is highly expected as it may signal another surge in bond yields. Mario Monti is now officially Italy’s Prime Minister and a new cabinet is now formed where Monti will also serve as finance minister. Versus the greenback, the single currency slipped to a five-week low versus the dollar at 1.3421 from 1.3556 but today the pair recovered some of its losses to trade at 1.3517
• The US dollar edged higher against a basket of currencies yesterday supported by a heightened risk aversion in the market. Economic data from the US also supported the greenback. Industrial Production and Housing Market Index both showed better-than expected figures. Today, Initial Jobless Claims, Building Permits and Housing starts data is expected at 13:30 GMT.
• The British pound plummeted after the Bank of England released its quarterly inflation report downgrading the country’s growth and inflation forecasts. Economic data also showed unemployment rising higher than expected raising concerns about the country’s weak economy and adding to speculation for additional monetary easing. Bank of England Governor Mervyn King spoke yesterday and warned that the UK may face another credit crunch and raised the prospect of a double-dip recession. Versus the greenback, sterling slid to a four-week low at 1.5691 from 1.5815.
• Oil prices rallied yesterday hitting 102.88 dollars a barrel from 98.40, a rise of 4.6%. Gold rose yesterday to 1753.37 dollars an ounce from 1783.60. Silver fell to 33.49 dollars an ounce from 34.60.

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