The ECB today left interest rates on hold as expected, but ECB President Draghi warned of downside risks to Eurozone growth and less concern about inflation, thus signalling a further slide in the Euro as loose monetary policy remains in place. EURUSD has been down to 3-week lows of 1.3107, EURGBP has fallen through 0.8290 support and had a look at the next line around 0.8260 ( GBPEUR up to 1.2105 ).

GBPUSD has not escaped entirely and we’ve been down to 1.5832 before finding decent levels of demand.

Adding to the general sense of gloom was the news that Austria looks to be joining Germany in not accepting certain EZ sovereign debt from the likes of Portugal as collateral., significant because Austria is already hugely exposed.

And if that wasn’t enough Spanish borrowing costs have risen sharply after a disappointing bond auction. European bank stocks have fallen sharply again as investors fear their heavy purchases of Spanish government bonds – financed by the ECB’s loans – has mixed the fates of the public and banking sectors even tighter and increased the chances that either may drag the other down.

Gold has also continued its slide since yesterday’s FOMC Minutes and is now trading at $1618, just off its $1612 lows earlier.

All in all a bit of a reality check and not a pretty sight out there tight now.. Nothing much has changed in effect but the last 24 hours has seen some carnage.

And there’ll be more to come for sure.

Image by World Economic Forum [CC-BY-SA-2.0 (], via Wikimedia Commons

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