A sea of troubles

Here we go again

A century ago the Battle of Doiran, on the Macedonian border, was successful in preventing an invasion from Greece. Today the EC wants to mount a similar - hopefully less bloodthirsty - campaign. In 1917 it was the British that were held back: today's would-be intruders come from the Middle East.

Things have come to a point where Brussels is considering Greece's suspension from membership of the Schengen passport-free travel area because so many migrants pass through the country on their way to Calais. Athens says it is being picked on unfairly and governments elsewhere worry that even a partial dismantling of Schengen would create another crack in the EU edifice.

And investors don't care. The euro was the second-best-performing major currency on Monday, making the most of its safe-haven status. The yen was top of the shop with a 1% rise while the euro's one-cent gain was worth 0.8%. Sharing third place the US dollar and the Swiss franc banked gains of three quarters of a cent, 0.5%. Sterling was, on average, steady and the commodity- and energy-oriented currencies were the losers. Sounds familiar?

Risk off

Although the global picture on Monday morning looked reasonably bright ahead of London's opening, it soon started to deteriorate. Oil began to head back below $30 and equities followed it down, prompting yet another move into the safe-haven currencies.

Other than the Russian ruble, which took the biggest hit with a -3.2% drop, it was the Commonwealth dollars and the South African rand which bore most of the brunt of the flight to safety. All three were down by around -0.5% and remain under pressure this morning.

The moves had nothing to do with any fresh economic revelations. Monday's ecostats contributed little to the action although most were a touch softer than expected. German business confidence, UK industrial orders and the Dallas Fed's manufacturing index were all slight but unimportant disappointments. Mario Draghi surprised nobody when he told the Deutsche Börse that the European Central Bank cannot alone solve the economic ailments of the euro zone.

Red-number day

Oil opens -8.4% down on the day and the Shanghai stock index has closed with a -6.4% loss. That picture is unlikely to inspire confidence among western investors. It could well lead to further declines for the commodity currencies and higher prices for the safe-havens.

Tuesday will be another slow day for ecostats. The only data from Europe are for Switzerland's trade surplus and Sweden's producer prices. A handful of US figures cover house prices, consumer confidence and the provisional services sector purchasing managers' index. The Bank of England governor will attend parliament's Treasury Committee to answer question on financial stability.

But by far the biggest influence on financial markets will be the red numbers that greet investors as they turn on their screens this morning. Some brave souls will see it as a chance to buy cheaply: most will top up their sandbags.