The US dollar strengthened against a basket of currencies as investors flocked to the safe haven currency status of the greenback as global equities tumbled.  Also supporting the dollar was rising concern over the situation in the Korea peninsula after a story broke from a South Korea news agency that North Korean leader Kim Jong-il had told his troops to prepare for combat.

In other news, US consumer confidence came in at 63.3 vs. a reading of 57.7 in April. 

Look for the dollar to continue to gain momentum as the fear in the euro zone continues to spill over into the global economy. 

The euro fell to a four year low against the dollar and an eight and a half year low against the yen after Spain's weekend takeover of a small savings bank.  The Bank of Spain on Saturday said it had taken over bank CajaSur.  Even though the bank is relatively small, the take over has highlighted weaknesses in the European banking sector.  Look for the euro to continue to remain pressured as bearish sentiment dominates the market, with the market looking toward the next key psychological level of 1.20.   

Sterling fell more than 1 percent against the dollar over concerns that fiscal tightening by Britain's new government could hurt economic recovery.  In other news, GDP came in at 0.3 percent showing a slightly faster growth pace than initially expected.  Look for the pound, however, to remain under pressure as the finance ministry announced 6.25 billion pounds worth of public sector spending cuts.   

The Japanese yen strengthened against the dollar and euro as investors moved into safe haven currencies.  With risk aversion continuing, look for the yen to see resistance at 89.90 and then just above 90.00 at 90.10. 

The Canadian dollar fell to a seven month low against the greenback as investors move into safer haven currencies over continued concern over troubles in the euro zone.  Look for the Bank of Canada to potentially hold a rate hike that was planned in June due to the volatility over the financial markets. 

The Australian and New Zealand dollars weakened to ten month lows against the dollar as risk aversion took focus with continued uncertainty in the euro zone.  Look for Aussie resistance to come in at 0.8360/65 and support to come in at 0.8100, while the kiwi will remain under pressure as the market looks for signs of a possible delay from the Reserve Bank of New Zealand in regards to next month's expected rate hike.

Indicative rates:

EUR/USD

1.2288

USD/JPY

89.43

GBP/USD

1.4377

USD/CAD

1.0770

USD/MXN

13.1857

USD/CHF

1.1586

AUD/USD

0.8187

NZD/USD

0.6673

10-Year Treasury Note Yield:  3.138%

Dow Jones Industrial Average:  9,879.60 - 185.31