Markets are mixed this morning as risk aversion returns, with global fears rising on the possibility of a double-dip recession in the US. The US dollar is off yesterday's lows against the majors, after a lackluster report on the U.S. service sector added to other recent data suggesting recovery in the world's largest economy is slowing. Today's recovery may be short lived before a significant move lower for the dollar.

The euro will remain under pressure as investors scrutinize details of plans to test the financial health of European banks. If growth concerns return, then Europe will be worse off than the U.S.

The euro was little changed after worse-than-expected data showed factory orders in Germany fell for the first time this year in May. The single currency remains vulnerable, as investors look to the 16-member bloc's growth prospects amid a back drop of strict budget cuts and the potential for another downturn in the global economy.

The sterling slipped from recent multi-week highs against the USD following data released today, which showed a slide in UK job growth in June, highlighted the fragility of the employment sector. This sector is likely to face more pressure when drastic public spending cuts take effect.

The Bank of England began a two-day policy meeting today and will announce its decision tomorrow. Investors expect the BoE will keep interest rates at current record lows. Market participants said they would focus on whether the central bank is becoming concerned about economic growth, and inflation risks, which have been creeping up.

Giving up significant gains from yesterday's rally, the Canadian dollar continued to slide lower against the USD, weighed down by falling commodity prices combined with the weight of the economic woes of the USD on their economy.

Though it is likely that the loonie will show continued weakness, there is strong resistance at 1.0745, breaching that target would expose the Canadian dollar to its weakest 2010 level at C$1.0853.

With risk aversion back in the forefront, the Japanese yen continues to hover near its 7-month high against the USD, as market players continued to seek the yen as a safe haven currency. Japanese officials are peppering the market with comments in support of a weaker yen, as current levels could cause pain to Japanese exporters if sustained.

The Australian and New Zealand dollars gave up yesterday's short-lived gains as investors turned away from risk and took profits on yesterday's surge.

Anxiety about the prospects of world growth have hurt equity markets, taking a further toll on the Australia and New Zealand dollars which tend to mirror the performance of Asian shares.

 Indicative rates:EUR/USD

1.2643

USD/JPY

87.02

GBP/USD

1.5214

USD/CAD

1.0509

USD/MXN

12.8933

USD/CHF

1.0526

AUD/USD

0.8584

NZD/USD

0.6998

 10-Year Treasury Note Yield:  2.959%Dow Jones Industrial Average:  9,881.67 +137.97%

This market summary is prepared by Union Bank's Global FX Department for the general information of its customers. It is based on the most accurate information currently available, but should not be considered investment advice or a guarantee of future exchange rates or trends.