A half-hearted attempt at a rally by the euro quickly failed as the dollar rose Tuesday morning. The dollar is making a super-strength push especially against the commodity dollar of neighboring Canada and that of the commodity plush Australia . Despite this the dollar index is still marginally in the red at the start of a two-day FOMC meeting, with the Japanese yen acting as the main culprit in holding back the dollar. Risk aversion, it would seem, has somehow found its way back onto today's agenda.

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 The inertia Tuesday was caused by a retreat of the Chinese dragon back into its cave. Apparently much of the fire-breathing is turning to smoke and investors are starting to worry that the monster needs somewhat of a rest before it can produce more fire.

Data released after Asian bourses closed showed a couple of potentially bothersome signs. Chief today was the value of new yuan lending, which reading 355 billion yuan ($530 billion) came in at a tiny fraction of June's 1,530 billion yuan. Analysts were overly optimistic when they predicted a 500 billion reading. As a result of the smaller amount of loans fixed asset investment, a closely watched statistic also came in shorter than the predicted 34% year-over-year growth rate.

Chinese industrial production data also disappointed by growing at a 10.8% rate compared to July last year. All together the data appeared to under whelm global growth enthusiasts. The ricochet implications were widely felt in the region. The data was released too late to impact rising equity prices across the region, but tore a strip off growth-biased currencies. The Australian dollar lost ground to both dollar and yen and currently buys 82.90 U.S. cents. The U.S. dollar declined by more than one yen to ¥95.95 as risk aversion rose to the top of the stack.

The Canadian dollar also shrank to 90.80 against the U.S. dollar. Once an argument such as this undermines the bulls, it creates first of all a need to ditch profitable long positions, but the fierce pace with which the currency turns sour creates losing positions for those late to the game. That makes it hard to allow any rallies to take grip since no one has a good reason to get into the growth units. The sudden loss of conviction is dramatic but serves to take pressure off growth prospects hampered by rising currency prices in the first place.

The British pound is a little higher today after feeling a similar loss of investor appeal in recent days. Later this week investors will hear the latest two-year forecasts for growth and inflation from the central bank. Some are predicting that the Bank of England will dish up a warning over prospects for a deflationary spiral ahead, which lends support to the Bank's recent extension to its asset purchase program. Currently the pound buys $1.6487. Against the pound one euro buys 85.72 pennies.