By FX Empire.com

Volume is lighter today since the US and Canada will be absent celebrating Thanksgiving Day. This opened the way for some correctional movements after the sharp losses witnessed a day earlier.

The pessimism generated in Europe over the debt crisis and the weaker outlook for the US economy produces sharp losses yesterday as widely avoided risky assets and target lower yielding ones.

The slowing economic activities in major economies around the globe was able to provide the USD with bullish momentum against major currencies yesterday, rising as high as 79.17, yet today it managed to weaken trading around 78.88.

A German 10-year securities auction failed to get sufficient bids, which raised the alarm that Europe’s debt crisis is worsening. In Germany the GDP was steady during Q3 at 0.5%, while the business climate improved slightly during Nov.

Stocks in Asia were mixed today after Standard & Poor’s warned Japan it might be close to a downgrade, while People’s Bank of China cut the reserve ratio by 0.50% for more than 20 rural credit institutions trying to sustain growth.

Nikkei 225 fell 1.80% today, while China’s CSI 300 Index gained 0.19%. In Europe stocks gained today on the unexpected rise in the IFO report, where FTSE 100 rose as of this writing 0.38%, DAX rose 1.38% and CAC 40 rose 1.46%.

The euro is trading with a slight bulish momentum around the 1.3365 level. The pound is almost unchanged from the opening, trading around 1.5520 after UK report steady growth during Q3 while private consumption fell below projections.

The yen was stronger today trading around 77.10 as of this writing as risk aversion was ignited in Asia following S&P’s report. The AUD rose as well trading around 0.9750 as risk appetite is strengthening during the European session.

The dollar’s losses gave the opportunity for the commodities to gain today, where crude oil is trading around the $96.60 per barrel level, while gold is trading around the $1697.25 per ounce level.

As the US is out of the picture today, volatility might be seen within the broad financial markets, especially as the euro zone’s unity became threatened by the widening debt crisis, and the outlook for the US economy is worsening.

Originally posted here