The US dollar gained against most currencies except for the Japanese yen as investors fled to safehaven assets after a sharp 4.3 percent fall in Chinese stocks and other overseas markets rattled
investors. Any recovery is expected to be moderate in the United States as recent reports showed
manufacturing and housing were starting to stabilize, but consumer spending remains weak and
unemployment continues to rise.

The euro softened on concerns that a big slowdown in China would weigh on a recovery in Europe and the United States as China is a big importer of American and European goods. German producer prices fell 7.8 percent in July, the fastest pace in 60 years suggested Eurozone rates will remain steady.

The British pound suffered after the Bank of England's policy meeting on August 6 minutes revealed that Governor Mervyn King wanted a bigger increase in asset purchases. The minutes indicated that the BOE is expected to keep rates unchanged at record low of 0.5 percent for some time. The door remained open for more quantitative easing. At the same time, the opposition Conservative Party leader David Cameron said the UK was running the risk of default on its debt also weighed on the sterling.

The Japanese yen was the biggest gainer today as investors bailed out of riskier currencies on doubt
about the global recovery. There are concerns that the Chinese market could be an indication for global stock and economies.

The Canadian dollar tumbled on risk aversion, but losses were capped as crude oil prices rose. News that Canadian inflation data hit a 56-year low in July did not offer movement in the currency. Bank of Canada is expected to keep rates on hold.

Both the Australian and New Zealand dollar gave back gains, hurt by a fall in Chinese stocks. Risk
currencies, especially the Aussie, are sharply impacted by any doubts surrounding the strength of
China's recovery as China is Australia's second largest trading partner after Japan. Data showing that New Zealand producer prices slid in the second quarter had little market impact.