Good morning,

Markets are having a tough time shaking this risk-off theme as equities open in the red yet again; the Dow Jones has fallen every day this week while European markets post their largest weekly drop so far in 2012.

It did not take long for Greece to return to headlines following the controversial passing of their private debt swap a couple weeks ago.  New 10-year Greek bond (post-swap) prices have fallen 14% since Wednesday, pushing yields back above 20%.  Credit markets clearly do not believe that the second Greek bailout will be sufficient for the country to return to financial stability.  Surprisingly, the Euro has gained two-cents against the Loonie over the course of the week.

Hopes of a US and European economic recovery, paired with denials of QE3 from Fed Chairman Ben Bernanke have sent the price of Gold to a two-month low this week; however, Gold has found a bid this morning and is up 0.75% with the Greek story coming back online.

Overnight markets saw support amid rumors that the Chinese central bank would cut the reserve requirement ratio (RRR); however, markets retreated to negative territory when the cut to bank capital requirements failed to materialise.

Canadian core CPI rose slightly more than expected in February, 0.4% vs. 0.3%, led higher price clothing costs.  US new home sales in February are expected to come to print at 326K from 321K in January.

North American equity futures are down 0.15%, while European and Asian markets are down 0.65% and 1.15% respectively.  Crude Oil has caught some support, up 0.3% ($105.70) though the Canadian dollar has lost another 15 basis points against the USD, after falling nearly one-cent through yesterday’s trading session.