Kathleen Brooks, Research Director UK EMEA, FOREX.com

What a week. The race to the bottom between the majors is well and truly on and right now Europe is winning a race that a no one wants to win. However, things don't look that good in the UK and the US, so while Europe is in focus right now, we wouldn't be surprised to see the spotlight shift across the Atlantic at some point.

But with that said we are still in a dollar and yen-positive environment until the Bank of Japan comes in and intervenes that is. While USDJPY looks trapped in a range, the BOJ is more likely to target EURJPY, which has become the ultimate risk trade of late. If that gets down to 100 then expect the Japanese Finance Ministry to take up arms against the FX world.

A quick scan of the morning headlines isn't telling me much I don't know already. The mood is far from bright: the Dow had its biggest weekly loss since 2008, global equity markets have seen more than $3 trillion wiped off their value, and gold is having its own 2008 moment after experiencing its biggest two day fall since 1983.

So gold's status as safe haven has been eroded then? I doubt it; I think that gold is a victim of its own success. Investors need cash and to get it they have to sell their most profitable assets. For those lucky enough to have held gold for a while it means that the yellow metal is being liquidated to pay for pesky margin calls elsewhere. It's difficult to say how long this will weigh on the precious metal, but no one wants to stand in front of a moving train so go with the flow; right now there should be no heroics where gold is concerned regardless of how good the fundamentals are.

What has caught my attention this morning is the dichotomy between the US and the Europe on what is causing the current market turmoil. The US is putting the blame squarely on Europe's lap, while at a speech at the IMF meeting in Washington Friday night, the outgoing ECB President Trichet called the sovereign debt issue a global phenomenon not just a European one. He did acknowledge that right now Europe's problems are in focus, and along with Obama and every other US official of note, urged European leaders to act swiftly to resolve this crisis.

But he added that three years after the 2008 financial crisis global imbalances remain. This was a direct hit at the US fiscal position, which remains in much worse shape than the overall position of the Eurozone. So it's a battle of ideologies, and yet again Europe and the US fail to have complete understanding of how the other works.

The optimist in me suggests that the grim tone at the IMF/ World Bank meetings isn't such a bad thing. Only when global finance chiefs sound really worried does action usually happen. You never know, maybe Geithner, Osborne and co will resort to locking European officials in a room until they come up with a solution. Indeed there were rumours emanating on Friday - not of Europeans making SAS calls from Washington - but that there would be a boost to the rescue fund allowing it to buy more Italian and Spanish government debt and extend long-term loans to Europe's crippled banking sector.

George Osborne was clear: Europe has six weeks to solve the crisis. No wonder he is in such a panic, the UK's fiscal position is dire, its austerity budget is behind schedule and a disorderly default in the Eurozone may see the bond vigilantes' move across the English Channel. Since UK banks hold copious amounts of government debt, it is a wonder Osborne can sleep at night.

The last days of the third quarter are unlikely to ease global market fears. In Europe not only are there debt auctions, the dissolution of the Spanish Parliament in the lead up to the November elections and the crucial vote by Germany to agree to the extension of the EFSF rescue fund, but the US runs out of money on 30th September. Surely Congress won't leave us in limbo like it did in August with the US on the brink of default?

Overall, expect the unexpected. The dollar is likely to remain bid into Q4, but any resolution of the sovereign debt crisis in the coming days could see an about-turn in risk. It's hard to predict anything with certainty right now, so keep stops tight and become short-term in your thinking.

On a brighter note, England smashed Romania in the rugby World Cup this morning by a hefty 67-3, complete with a swallow diving try from Chris Ashton. That was my highlight. The "Ash Splash" draws a lot of criticism, but you can't blame him when the score is so much in England's favour.

For those who want some lighter reading or for the classics buffs among us there is one excellent story on Bloomberg this morning. Did you know that Greece was the first ever country to default 24 centuries ago? Back in 4th Century BC, ten Greek municipalities failed to repay the Temple of Delos. So there is a precedent for its current problems.