httpvh://www.youtube.com/watch?v=jJJTX5G0qAc

The global buying of risk continued on Friday with haven currencies such as the US dollar, Japanese yen and Swiss franc all sliding while equity markets crept higher. Similar moves have been seen in the overnight Asian session with traders banking on the global recovery story.

As we foresaw on Friday German IFO did slip in August with the slip in business confidence being attributed to a slight fall in industrial production and fears over peripheral European states and their debt crisis. The figure had little impact on the euro however and it continued to gain against the rapidly retreating US dollar.

Gold continued to blast higher on Friday touching the $1300 level overnight for a new record high. Commodity demand is so strong at the moment for a good few reasons. The first is fear, with investors looking for a tangible value holder while the global outlook is still uncertain. The second is as an inflation hedge and the third is to mitigate risks from the global currency devaluation race the major economies are indulging in at the moment. It is only likely to continue higher.

Over the weekend in the UK Ed Miliband was appointed to the Labour leadership. His policy on the imminent spending cuts is one of ‘wrong cuts at the wrong time will put the recovery at risk’. His appointment is likely to increase the volume of the anti-cut fight and boost the unions’ resolve when it comes to industrial action.

There is little data today and we expect the sell off the dollar to continue.