Dollar Firms As Risk Aversion Grips Markets

The dollar was firmer across the board as risk aversion took hold. With little economic data released during the NY session, markets focused on softer PMI figures out of China and Europe as well as the elevated sovereign debt concerns as highlighted by record high peripheral bond yields.

Safe haven currencies gained on the day with the dollar outperforming. The Japanese yen was also stronger against most of its counterparts and EUR/CHF reached record lows as the Swiss franc firmed. EUR/USD dipped below the psychological 1.4000 figure and has since bounced slightly to current levels of around 1.4050. The only economic data of note was the disappointing release of the Chicago Fed National Activity Index which came in lower than the expected +0.20 with a print of -0.45, a decline from the previous +0.26 reading.

U.S. equities were deeply in negative territory throughout the session with the Dow Jones Industrial Average falling by about -1.05% and the S&P 500 declining around -1.19%. Commodities were mixed with oil lower by around -2.63% while the precious metals gained. Gold and silver were up by about +0.28% and +0.06% respectively. U.S. 10-year Treasury yields fell by about 2 basis points as investors sought safety in Treasuries.

On the data front for the upcoming Asia/Pacific session is the RBNZ survey of inflation expectations as well as a speech by New Zealand Finance Minister Bill English.

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