The dollar weakened further against its peers today as uncertainty over global economic growth continued to heavily influence market outlook.  Worry over the strength of European banks triggered a selloff in financial stocks yesterday which led to a drop in European and US markets pushing the dollar lower.  The dollar dropped to its lowest level in 4 months as investors flocked to traditional safe haven assets such as the yen and the Swiss franc.  The US dollar index was down 0.76% trading at 96.03.

The euro strengthened against the dollar with the pair rallying 0.90% trading at 1.1294 off its session high of 1.1338 after having come off its session low of 1.1161 reached earlier in the day.  Data released earlier in the session revealed that German industrial output dropped suddenly in December by 1.2% highlighting a poor end to 2015 by the euro zone’s largest economy. 

The pound weakened against the dollar with the pair down roughly 0.1% trading at 1.4460 off its session high of 1.4514 after having come off its session low of 1.4378 reached earlier in the day.  The UK Office for National Statistics released data which revealed that the UK’s trade deficit grew from 8.5 billion pounds in the 3rd quarter to 10.3 billion pounds in the 4th quarter which is its largest trade deficit since the beginning of last year.  UK’s annual trade deficit expanded from 0.3 billion pounds in 2014 to 34.7 billion in 2015. 

The yen strengthened against the dollar with the pair retreating 0.81% trading at 114.91 off its session low of 114.20 after having come off its session high of 115.84 reached earlier in the day.  The yen was supported by safe haven demand on the back of the Nikkei’s largest decline in 3 years closing down 5.4% as worry intensified over the state of the global economy.  Asia markets were thinly traded as China is closed in observance of the 5 day long Lunar New Year Holiday.  The yen rose to its highest level against the dollar in over a year as the widespread selloff in global equities continued.  The yen advanced even though the Bank of Japan surprised the market by introducing negative interest rates in January, as lower rates typically reduce a currency’s attractiveness to yield seeking investors. 

The Australian dollar weakened while the New Zealand and Canadian dollars strengthened against the greenback.  The Aussie dropped 0.45% against the dollar with the pair trading at 0.7056 off its session high of 0.7095 after having come off its session low of 0.6973 reached earlier in the day.  The Aussie dropped sharply during the Asian session on thin volume as business sentiment took a hit.  The National Australia Bank released data which revealed that its business confidence index inched down from a reading of 3 in December to a reading of 2 in January matching forecasts.  The kiwi dollar closed in on the greenback by 0.17% with the pair trading at 0.6639 off its session high of 0.6668 after having come off its session low of 0.6562 reached earlier in the day.  The kiwi dollar pushed lower late in the Asian session as demand was diminished due to risk aversion amid global growth concerns.  The loonie edged up 0.14% against the greenback with the pair trading at 1.3907 off its session low of 1.3786 after having come off its session high of 1.3960 reached earlier in the day.  Global economic concerns pushed the dollar lower against the loonie although the Canadian currency was still pressured by the ongoing decline in oil prices.    

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