Weekly Review and Outlook: Could EU's Emergency Funding Mechanism Stabilize Markets?

[Forex-Outlook]

It was a crazily volatile week and markets were clearly in risk averse mode. The -998 intraday fall in DOW might be exaggerated by "fat finger" or "computerized trading". But it's undeniable that the -628 pts fall in DOW was significant. Investors were in deep worry of contagion from the Greek fiscal crisis. It reached a point where something sensational was needed from authorities to restore confidence. ECB was supposed to do so last week but failed when policy makers didn't even did what the markets wanted, that was discussing about government bond purchases and selloff in risk assets intensified from there. We're talking about -5.7% fall in DOW, -6.4% fall in S&P 500, -6.2% fall in Nikkei, -5.9% fall in CRB commodities index and 12.8% fall in crude oil. Yen crosses are broadly lower with EUR/JPY down -6.82%, AUD/JPY down -6.58%, GBP/JPY down -5.72%, CHF/JPY down -5.35% and CAD/JPY down -5.10%. Meanwhile dollar index managed to accelerate recent rally and breached 85 level before closing at 84.47.

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