Instability In Egypt Causes Jittery Markets & Safe Haven Flows - As the crowd gathered in Cairo’s Tahrir Square, Egyptian President Hosni Mubarak said that he would delegate some powers to his vice president, but he refused to step down until September. This is not what the crowd wanted to hear, simply changing cronies is not going to cut it. The situation is getting tenser and that is being reflected in the markets as USD and gold are benefiting from safe haven flows. In Europe, the Euro continues to be weighed down by upcoming elections in Ireland and parts of Germany, Portuguese bond yields over the magic number of 7%, the lack of a comprehensive plan to tackle the sovereign debt crisis, and uncertainty over the next ECB president. The foot dragging you are witnessing here is mainly due to the elections in Germany - everyone knows what needs to be done here but they don't want to announce that Germany is prepared to raise the ante in fear that it could cause German Chancellor Angela Merkel to lose the support she needs to authorize it. In Asia, the AUD fell below par against the USD after Reserve Bank of Australia Governor Glenn Stevens told parliament that it was reasonable to expect rates to be on hold for some time. Meanwhile, the USD continued its climb against the Yen as bond yields continue to favor the US. In Canada, the CAD has bucked the trend and moved higher against the USD as December's trade data shows that Canada's trade balance returned to a surplus after nine months of deficits, fueling hopes the much-coveted export recovery is finally gaining traction. Also, firmer oil prices due to the turmoil in Egypt and the fear that the upheaval could spread to other countries in the oil-rich region are supporting the CAD.
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