The dollar weakened considerably against its peers today as China’s debt markets faced new restrictions and political unrest in Greece created safe haven demand for the yen.  The dollar tanked along with a selloff in global equity markets on the back of a shocking decision made by the Greek government to hold a parliamentary vote for president next week which could lead to snap elections if Prime Minister Samaras’ candidate is not chosen.   Market sentiment was also slammed by new restrictions imposed by the Chinese government on short term loan collateral which added to concerns that Chinese economic growth is lagging greater than forecast. 

The euro strengthened against the dollar with the pair rebounding off its 2 year low set on Monday following data released out of the euro zone which revealed that Germany’s trade surplus increased by 2 billion euros to 20.6 billion euros between September and October, while experts had forecast an increase to 19.2 billion in October.  The euro gained against the dollar even though the dollar was still supported by US nonfarm payrolls data from last week.     

The pound strengthened against the dollar however its advances were curtailed following data which revealed that UK industrial output declined suddenly in October as it was weighed down by a sharp drop in manufacturing activity.  Industrial production dropped by 0.1% while manufacturing output dropped by 0.7% marking the greatest monthly decrease since May. 

The yen strengthened against the dollar as plummeting oil prices also bolstered safe haven demand for the yen.  Oil fell to its lowest level in 5 years on Tuesday as increasing supply surplus continues to put pressure on prices going into next year.  The dollar still maintains some support from the differing policy outlook between the Federal Reserve and the central banks of Japan and Europe.  The yen was also stronger against the euro. 

Commodity associated currencies such as the Australian, New Zealand and Canadian dollars regained lost ground against the dollar. 

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