It was a risk off day yesterday with concerns from Greece steering major European and US Indexes. The Euro broke below the crucial psychological barrier of 1.30 against the dollar dragging the precious yellow metal down 2.1% with it. The concern from Greece remains the same that whether the new government whoever it may be sticks to the original plan and whether Greece be willing to implement the austerity measures or look for an exist.

There was some signs of bargain hunting in the markets yesterday which showed that there were some who were still slightly hopeful in the short run but the current trend seems to be to the downside unless there is some clarity from Greece and Spain doesn’t join in on the party.

Pressure from Moody's this morning as the investors service is threatening to cut credit rating of some of Europe's largest banks.  BNP Paribas SA and Deutsche Bank AG being key amongst the names on the list, France's and Germany's top banks being downgraded can, and will, prevent interbank lending and can stifle any efforts to step further away from the recession.  As strict internal rules dictate for many banks they will only lend to companies with a credit rating that is of the highest quality, Moody's downgrading the top banks will hinder these deals and could even see France and Germany pulled into recession if their banks are hit hard enough.  If Moody's leaves the banks alone then the relief in the market will be immediately visible, although the expectation is that they wont.

Posted by Khurram Ali (