Market Relatively Quiet, though Risks Swirl in Europe and Middle East
	Market Highlights: Portugal Faces Austerity Vote  Energy Prices Continue to Rise  Best Rates Guaranteed with XE Trade. Get a Free Account Portugal Faces Austerity Vote Many traders started the day today with the realization that, while there is not too much to report on the data front, there is a lot of talk swirling around the rumour mill regarding political factors that could impact the market. First, the Portuguese government faces a strong chance of collapse due to a failure to gain parliamentary approval on the proposed austerity measures announced a couple weeks back. Portugal holds a minority government, and if the vote fails, there would be elections in April; more importantly, however, there would be no government to negotiate the terms for the EFSF (European Financial Stability Facility). This could be problematic due to the significant funding needed in the coming month. Elsewhere, Ireland is working to come to an agreement with the EU this week on a re-negotiation of their EU-IMF loan. They will need to show credibility in the latest bank stress tests to do so. All in all, there are many risks for Europe, but surprisingly, its problems are still not really being focused on in the market. The euro dropped overnight, but only marginally, especially given the situation. More generally, the USD, although gaining across the board today, is still under pressure from a technical standpoint. The EUR, for example, after breaking the 1.40 mark, is currently trading well above that level, so there seems to be significant support for currencies against the Big Dollar, even as the risk persists that it could enjoy some strength if problems in Europe continue (and the market focuses and trades on these events). The Canadian dollar, in contrast, traded very flat overnight, but is now falling slightly as the USD gathers steam against the majors. Yesterday the budget was released, and the opposition is less than supportive, signalling that they could bring the government down due to non-confidence, which would mean election time. However, the market is not too concerned with this; Canada is still viewed as favourable and stable as the budget did call for a surplus by 2015, and as such the Loonie has traded well overnight, at least against the crosses. Across the water, the GBP has been the clear loser on the day, falling almost 0.75% overnight. After enjoying a strong pop yesterday following the above-expectations CPI reading, today the relevant market mover was the MPC meeting minutes release, which was not necessarily dovish or hawkish, but traders pared positions as stops were triggered. There was explicit mention of oil prices and factors in the Middle East, which shows that the central bank is worried about energy costs. Energy Prices Continue to Rise On that note, energy prices continue to climb as coalition forces prepare for more air and ground strikes in the Middle East. Yemen’s government is also on the brink of failure (for different reasons than Portugal), and the president has warned that the country will experience civil war if he is forced to resign. Nonetheless, his resignation appears likely, as senior military officials are in support of the protestors. Furthermore, in Bahrain, unrest is ongoing, posing a significant threat to oil markets due to its location. Oil has jumped up again today and Brent Crude hit over $116/bbl while West Texas is trading above $105/bbl. Energy could still go higher before this is all over, which does strain a global economy still struggling to achieve sustainable growth.  By Tyson Wright, Senior FX Trader