Liquidity has drained for the holiday and the last week of the year will be defined by volatility that refuses to follow fundamental and technical guidelines. This is the time to ‘come up for air’ and assess the scene for the start of 2012. Risk appetite trends in traditional capital markets (like equities) are still elevated despite the warnings to financial stability and growth. In contrast, the reality that the European sovereign and banking crisis will not yield to policy officials’ efforts at a rescue is boosting the stakes of a systemic crunch. This conflicting sense of expectation and actual positioning will have to be reconciled; and S&P 500, EURUSD, AUDUSD, Gold and every other risk sensitive asset in the markets will feel the effects.