Risk Aversion as Euphoria Over Europe’s Rescue Deal Fades

Concerns about the euro zone’s safety persist as the euphoria over Europe’s rescue deal is fading since investors consider the measures to be insufficient to prevent the spread of the debt crisis, while inChinaexports rose by the weakest pace since 2009.

In Asia this morning, confidence and risk appetite were sustained by the improvement in the US consumer confidence which rose to a 6 months high last Friday, while European leaders revealed last week a blueprint for a fiscal deal aimed to save the euro union.

However, as the excitement over Europe’s rescue deal started to fade, worries overEurope’s growth were reignited, especially since the deepening debt crisis is starting to disturb global trading and limit demand on exports, pushing the Chinese exports to the weakest in more than two years.

As the Chinese economy seams to be slowing down, and inflations proved to be softening, Chinese policy makers are expected to start loosen their monetary policy to sustain growth. Thereby Nikkei 225 rose today by 1.37% and Australia’s S&P/ASX 200 Index rose 1.18%.

In Europe however stocks are dropping as investors are uncertain about the rescue deal. FTSE 100 fell 0.53% while DAX fell 1.27% asItalyis preparing to sell 7 billion euros of one year bills today, while France is preparing to sell 6.5 billion euros of short-term debt in an auction.

While Europe will lack the economic data today, and the US will only release the monthly budget statement for Nov., investors are seeking the safe haven USD which is trading with strong bullish momentum around the 79.20 level, pushing the higher yielding assets sharply to the downside.

The euro is trading with strong bearish momentum around the 1.3260 from the opening at 1.3378 while the pound is trading around the 1.5544 level from the opening at 1.5651. The yen also weakened trading around the 77.81 level, while the AUD is trading around 1.0110 from the opening at 1.0208.

The dollar’s bullish momentum is imposing downside pressures on commodities, while oil is trading around the $98.00 per barrel level from the opening at $99.54, while gold is trading around the $1678.50 per ounce level from the opening at $1712.60 per ounce level.