Sovereign debt risk has taken over for fundamentals to leverage a dollar rally.

The euro finished the week sharply lower against the US dollar, trading to its lowest levels since November, 2008 on continued fiscal crises across the single-currency bloc.

The Japanese yen after a week of volatility ended slightly lower against the dollar but marked gains against the euro and pound as the European debt crisis saw the safe haven currency benefit from increasing pessimism.

The British pound is set to trade in line with global equity markets as currency traders and the central bank alike are left waiting for a reading on the fiscal landscape, leaving risk sentiment as the only clear-cut catalyst in the near term.

The Canadian dollar pared the four-day rally as investors scaled back their appetite for risk, and the currency is likely to face increased volatility over the following week.

Should we prepare for intense and persistent Central Bank intervention?

Is it because the gold market is anticipating a blow-up in the world’s monetary system?

One day the world is convinced that the central bankers and financial meddlers of Europe have the secret to success. The next day, they change their minds.

Europeans live well. And thanks to so many transfer payments and so many government-provided services, they live well without really having much money to spend. Their incomes go to pay taxes and social charges. Trouble is, they enjoy a standard of living that they can’t really afford.

Over the past few weeks, uncertainty in the Eurozone has affected risk appetite in assets across the globe and even with the rescue plan developments in Europe will continue to dominate trading in the coming weeks.