• Portugal/German 10-yr Govt Bond Spread Widens to 151bps
  • German EcoMin says volcanic ash cloud causing considerable disruption to economy
  • Majority of Europe’s airports are closed due to volcanic ash
  • Greek/German 10-yr bond yield spreads widen to 468bps Euro lifetime high – Tradeweb
  • Shanghai Composite closes down 4.8% with property stocks hammered
  • EU’s Juncker says Greece’s economic programme to be on common EC/ECB/IMF terms
  • Germany’s BDI industry association says sees German growth of 2% as likely in 2010
  • EU/IMF visit to Greece delayed to Wednesday due to flights disarray
  • Fitch revises Thailand’s currency rating outlook to negative from stable
  • UK and European authorities seeking info on Goldman Sachs
  • Goldman SEC $1 bln case opens lawsuit floodgates on Wall Street – The Times.
  • Weekend UK election polls confirm big bounce for LibDem
  • Hungary faces risk of HUF sell-off on reliance on foreign loans – Lombard Street Research.

Theme – Asia and Europe continued on Fridays risk aversion theme with stocks in Asia hammered (Shanghai Composite down nearly 5%) whilst European losses more contained. The Goldman’s story grew and grew in Asia with the “magnetar trade” likely to see another 9 banks get caught up in the SEC probe.

Greece of course is never too far away from action with the CDS spread blowing out another 30bps to an all time high today. Portugal has also caught the wobbles leading to fresh fears of contagion. The UK opinion polls have changed dramatically since the televised debate last Thursday leaving GBP/USD vulnerable on a “no clear majority” outcome. Gold is down another 1% whilst oil is down 2%. All up a very ordinary day so far for “risk” trades.

EUR/USD after closing in NY at 1.3496 has witnessed little to no bounce today. It has been death of a 1000 cuts for the longs. The Greece/EU/IMF meeting was put off due to the flights situation whilst the Goldman’s story has weighed on risk trades. EUR/JPY is down nearly 1% having broken major technical support with stops triggered all the way down. Asian central bank buying just below 1.3440 provided modest support during Asia. Intraday range 1.3420-99; last at 1.3435.

USD/JPY has remained heavy on renewed risk aversion. The pair has also been pressured lower by continual EUR/JPY selling today. The low came in early London on EUR/JPY stops and whilst the bounce has been modest ((30 pips last) there may be some quasi intervention from the Japanese semi-government crowd taking place. Intraday range 91.60-92.21; last at 91.98.

GBP/USD has been under pressure all day with the additional burden of a massive swing in the opinion polls following the televised political debate last Thursday. No clear majority is now odds on with the bookmakers is a major turnaround from last week. The pair took out the 1.5200 barrier a short time ago and like the EUR/USD has failed to make much attempt at trying to bounce. Intraday range 1.5192-1.5359; last at 1.5214.

AUD/USD is falling steadily against the US Dollar but against the Yen it really shows. AUD/JPY lost 2% on Friday and is down around 1.5% today. Risk aversion is the main theme as per the others with local factors hardly rating a mention. Intraday range 0.9157-0.9246; last at 0.9181.

US equity futures are showing losses of around 0.5% on the open. March leading indicators is due out at 1500GMT.