20.02.2009

Euro was bid and closed at 1.2814 coming down from the highs of 1.2875, with ECB officials remark saying zero rates were neither desirable nor required and sterling was also well bid with closing more than 1% at 1.4412. With BoE rates at a historic low of 1% (lowest since Bank of England was constituted in the 17th century to look at international trade) - carry trade is clearly not in favour of sterling. Dow plunged to its more than 12 year low - after trading 7249.47 intraday, the index closed down 1.3% to 7366. With investor sentiment at its all time low, gold demand as a safe heaven is peaking with gold rallying back to $1000 per ounce and treasuries continue to rally even after concerns about a bond bubble. The concern is that those nearing retirement would run for cover in gold only to be whipsawed once again, when the tide inevitably turns.