The US dollar gained after the release of the U.S. financial-rescue plan sparked fears that it would not work, luring investors back into safe haven currencies. U.S. Treasury chief Timothy Geithner on Tuesday unveiled a new bank rescue plan, but failed to provide details on how he will help banks deal with toxic assets. Yesterday, U.S. stocks tumbled more than 4 percent on concern that the economy will remain in a recession for a while. News that the Senate passed an $838 billion economic stimulus package did not ease market worries.

The Japanese yen gained as investors took shelter. Safe-haven flows are going back into the yen as many investors were upset with the stimulus-package outcome yesterday. Whatever plans the government comes up with to clean up banks' bad assets, it will not be the quick fix investors are hoping for. Thus, risk aversion will continue to provide support to the yen.

The euro dipped as two European Central Bank officials indicated euro zone interest rates may be slashed below 2 percent as Credit Suisse Group AG, Switzerland's second-biggest bank, reported a bigger than expected fourth quarter loss. Declining euro zone growth and low inflation are also paving the way for further rate cuts. The ECB left rates unchanged at 2 percent, but is expected to cut rates in March.

The British pound was the biggest loser and was hammered after Bank of England Governor Mervyn King said measures to revive U.K. lending may not work and was ready to ease monetary policy further. News that UK unemployment rose to the highest since 1998 to 6.3 percent in December, and comments from the BOE stating Britain is in a deep recession ended the sterling's two-week rally. BOE's quarterly inflation report forecasted inflation well below the 2 percent target for the next 3 years, suggesting additional rate cuts may be needed. Last week, the Bank of England slashed rates to a record low of 1 percent.

The Australian and New Zealand dollar dipped as risk appetite diminished. Australian consumer confidence tumbled 4.6 percent in February, and opened the doors for further interest rate cuts in Australia. Last week, the RBA cut rates aggressively by 100 bps to a record low of 3.25 percent. News that China's imports and exports fell drastically in January dimmed Australia's outlook as China is Australia's top trading partner. The New Zealand kiwi also struggled. New Zealand's central bank also cut interest rates by 150 basis points in January and is expected to keep cutting rates until the economy recovers.

The Canadian dollar also stumbled as U.S. bank plan disappoints. News that Canada unexpectedly recorded its first monthly trade deficit in more than thirty years, as demand for commodities tumbled, hurt the loonie. Yesterday, Bank of Canada Governor Mark Carney noted that there is room to cut interest rates further. Interest rates are expected to be lowered on March 3 from its 50-year low of 1 percent.

Indicative rates:

EUR/USD 1.2901

USD/JPY 90.27

GBP/USD 1.4352

USD/CAD 1.2486

USD/MXN 14.5130

USD/CHF 1.1608

AUD/USD 0.6538

NZD/USD 0.5241

USD/DKK 5.7733

USD/SEK 8.3804

USD/NOK 6.7459

USD/TWD 33.973

USD/CNY 6.8332

10-Year Treasury Note Yield: 2.7870

Dow Jones Industrial Average: 7,920.26 +31.38