EUR/USD fell almost 1% to $1.2750 this morning, as worries about the European financial system resurfaced.  A report from the Wall Street Journal has suggested that some European banks did provide complete details of the government debt they held during the ‘stress tests’. The Wall Street Journal has claimed that certain bonds and details of short positions were not properly disclosed, bringing to question the validity of the stress test that has already been questioned for being too lenient on the banks. The European debt crisis was brought back into attention yesterday when PIMCO’s Andrew Bosomworth said Greece would default on its debt obligations when the EU/IMF bail-out funds expire in three years, while a separate report from the Association of German Banks estimated another €105 billion was required by German banks in order to meet projected Tier 1 capital requirements. With all the negative sentiment already generated around the European financial system, the euro saw even sharper declines after German factory orders unexpectedly fell by 2.2% in July. Economists surveyed by Bloomberg projected orders to increase by a meagre 0.5% following a 3.2% gain in June. If the current risk aversion mentality continues when the US market opens then the euro may continue to struggle. David Choe, London