U.s Forex market

Overnight Developments

• European stocks are lower with the European DJ Stoxx 50 down -1.40% and Dec S&Ps down -12.10 points. The dollar index jumped to a 2-month high and Treasuries were stronger after global stock markets declined as tensions between North and South Korea escalated and concerns remained high over Europe's debt crisis. The euro slumped to a 2-month low against the dollar after credit-default swaps to insure Spain's government debt rose 21 bp to a record 320.5 bp, climbed 19 bp to a record 599.5 to insure Ireland's government debt and rose 31.5 bp to a record 507.5 bp to insure Portuguese government debt. The euro was also pressured after comments from ECB Council member Liikanen who said that the ECB might keep emergency liquidity measures in place for longer "if required." European bank stocks are leading stock market declines with Santander, Spain's biggest lender, down 3.7%, Banco Bilbao Vizcaya Argentaria SA down 3.9% and BNP Paribas down 3.1%. Concer ns that Portugal may become the next victim of Europe's debt crisis intensified after the Financial Times Deutschland reported that by putting pressure on the Portuguese government, the ECB and other countries within the Euro-Zone aim to avoid a bailout of Spain, citing unidentified people within Germany's finance ministry. Also helping to keep European stocks in negative territory was the weaker-than-expected Oct French consumer spending that fell -0.7% m/m and -0.3% y/y, worse than expectations of -0.5% m/m and +0.4% y/y.
• The Asian markets today closed mostly lower with Japan down -0.40%, Hong Kong -0.77%, China -0.89%, Taiwan -0.45%, Australia +0.11%, Singapore -0.04%, South Korea -1.24%, India -0.94%. Rising tensions on the Korean peninsula undercut Asian stocks after North Korea said that joint military exercises between South Korea and the US will bring the region to the "brink of war" and it threatened a "shower of terrifying fire" should the US or South Korea infringe on its sovereignty. The US aircraft carrier Washington was headed toward the Yellow Sea for joint drills with South Korea between Nov 28 and Dec 1. A decline in Chinese bank stocks and property developers led China's Shanghai Stock Index lower after Shanghai Securities News said the Chinese government may cut the target for new lending next year.