Concerns over more downside risks in economy and stock markets, global risk aversion, continue to weigh on markets and sentiment. Cross/JPY, Cross/CHF - Gold under pressure now after overnight dive - could see further selling again.
Telegraph: A more severe crash than the one triggered by the collapse of Lehman Brothers could be on the way, according to alarm signals in the credit markets.
Insurance on the debt of several major European banks has now hit historic levels, higher even than those recorded during financial crisis caused by the US financial group's implosion nearly three years ago.
Credit default swaps on the bonds of large and key UK, German and Italian banks, among others, flashed warning signals on Wed.
"The problem is a shortage of liquidity - that is what is causing the problems with the banks. It feels exactly as it felt in 2008," said one senior London-based bank executive.
On FX, good to watch global banks for any further stress. EUR/USD lower at 1.4399-00, good Asian, sovereign, M,E, Swiss supra bids around 1.4350-80, huge stops below 1.4340 , as "longs" hide below the good buyers. EUR/CHF at 1.1450-55, interest to sell for break of 1.1400, offers at 1.1500 as SNB continues to combat strong CHF. More on Swiss tax next. WL
