ForexLive US Wrap: Jitters Return Despite Rise of The Technocrats

Early Asian bounce on back of Papademos, Monti appointments fades badly on Europe, US Buba's Weidmann continues campaign against ECB bond purchases; monetary/fiscal policy must be separate; Euro zone survival depends on a "stability union" Italy's Unicredit loses EUR 10.6 bln in Q3 on write-downs; to raise EUR 7.5 bln in additional capital, halt dividend ECB bond buying falls to EUR 4.5 bln in latest week from EUR 9.5 bln prior week; total portfolio now EUR 187 bln Germany's CDU approves a measure at a party conference that would allow stets to leave the euro "voluntarily" Moody's puts Credit Suisse on review for possible downgrade from AA1 Italy's Monti: Talks with parties to form government to conclude Tuesday Rising Spanish, Belgian, French bond spreads over Germany show crisis widening; All close at record highs S&P 500 falls 1% to 1252 US 10 year yield falls 2 bp to 2.04% WTI falls $0.80 to $98.20; gold falls $8 to $1781 There was a short-lived relief trade in Asian overnight after Italy showed Berlusconi the door over the weekend and made Mario Monti the man of the hour. The rally lasted about an hour and EUR/USD soon resumed its slide, slipping just below 1.3600 in early afternoon as European banking woes burst back into the headlines as Italy's Unicredit missed its earning forecast by a mere EUR 17 bln. More big bank write-downs are expected int he weeks ahead. Also causing jitters was a resolution adopted at a CDU party conference which would allow a struggling euro member to leave the roach motel that is the euro area. We slipped to 1.3591 before steadying. Solid resistance is seen on rebounds to 1.3680/85 overnight. We close at 1.3630. GBP/USD fell throughout the European session as Mid East accounts showed a decided preference for EUR over sterling. We tested key support at 1.5870/80, falling to 1.5883 before steadying. bounces were shallow, only to 1.5915, so pressure remains on in the near-term. USD/JPY was steady in US trade just above 77.00 while EUR/JPY slumped blow 105.00 intraday and ends at 105.10. Originally posted at Forex Live.