Euro Drops to 1.40, Credit Rating Agencies Reiterate on US

USD is higher against most currency pairs. Euro drops back to 1.40, relief short covering rally may come on Thursday. Risk aversion pushes EURCHF to new all time low. See link to latest Premium Trades below.

Euro dropped about 130 points since Asian open and trades right above the 1.40 figure. It is hard to imagine any meaningful recovery without a fundamental catalyst. The catalyst could be the meeting of Euro zone leaders on Thursday when they plan to reach an agreement on the second bailout for Greece.

The severity of the current situation in Europe is evidenced by Greek, Spanish, Portuguese, Irish and Italian five year credit default swaps reaching their respective record highs.

The prevalent risk aversion continues to support the CHF as EURCHF drops to new all time low at 1.1374. USDCHF fell to 0.8045 but has since recovered and trades above Asian session opening levels. While Swiss exporters hurt, large companies plan to capitalize on the currency strength. As WSJ reports, the Francs strength might bring a wave of mergers and acquisitions, especially in the pharmaceutical, food and energy sectors.

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