• Merkel: Europe on an irrevocable course to create fiscal union; no fast, easy solutions; crisis will last years
  • Greek FinMin: Euro area recession to worsen Greek economy; Greece suffering from worst peacetime recession
  • Chinese trade minister: Global market might contract in 2012
  • Eurogroup’s Juncker calls on countries to make all ESM contributions in 2012 though realizes not all members agree
  • Gold breaks 200 day moving average at $1618 and closes way below at $1572
  • Buba’s Weidmann: Time to drop idea that ECB will solve European crisis by printing cash
  • IMF’s Greek mission chief: Over-estimated Greece’s ability to implement reform
  • French Foreign minister: Losing AAA rating would not be cataclysmic
  • Swedish FSA rejects EU proposal on financial transaction tax
  • US 30-year bond auctioned at record low yield of 2.92%; bid-to-cover over 3x
  • Senators: Bernanke told us no Fed bailouts for Europe, no Fed cash for IMF
  • Greek PM Papademos: 2011 will be worst year of recession; no further wage, pension cuts or tax hikes expected
  • S&P 500 falls 1.1% to 1212; Milan falls 2.8%
  • US 10-yr notes close at 1.899%, down 7 bp; Italian new 10-yr bond ends at 7.24%
  • WTO falls $5.25 to $94.90; gold slides $59 to $1572

Another tough day for the euro. It had quite a battle getting through 1.3000 in London and was unable to hold above that level on afternoon forays up to 1.3009. We end the session at 1.2980 after having fallen as low as 1.2945.

When did we make the low? Just ahead of the 16:00 GMT fixing as asset managers continue to pull cash out of European markets as fast as they can.

Where are the flows going? Straight into US Treasuries, if today’s outrageously strong 30-year auction is any indication.

Commodity currencies were slaughtered once again with AUD sliding back to the 0.9880 area as the combination of falling commodities, flagging Chinese growth and European chaos cast a pall over the outlook for global growth.

The only Euro cross that showed much strength today was EUR/CHF with the market boldly going where no central bank has gone before, raising a peg put in place to stop its safe-haven currency from leaving earth’s orbit. If the SNB does not raise the peg (and I, for one, do not believe they will) to at least 1.25 tomorrow look for a sharp shake-out of EUR/CHF longs.

USD/JPY saw short-covering from macro funds today but ran into sellers in the 78.15/20 area. Stops are eyed above resistance at 78.29. It closes at 78.03.