The dollar and yen rallied on Monday as a sharp slide in stocks worldwide boosted safe-haven demand for the U.S. and Japanese currencies. The dollar index surged to a one-month’s high of 86.871 as U.S. dollar strengthened against most of the major currencies, rising to session highs of 1.2888, 1.4501, 1.1742 against the euro, British pound and Swiss franc respectively, however, it dropped versus yen and fell to as low as 97.66 before stabilising.

Commodity currencies such as the Australian, New Zealand and Canadian dollars declined against the dollar and yen as commodities prices plummeted amid a global economic slowdown. The crude oil future prices for May delivery tumbled more than 9 percent to a session low of 45.50 in New York afternoon, leading the Australian dollar, New Zealand dollar and Canadian dollar fell against the dollar to sessions lows of 0.6953, 0.5488 and 1.2398 respectively, and aud/jpy and nzd/jpy fell from 71.87 to 68.08 and from 56.66 to 53.63 respectively.

U.S. stock markets dropped sharply on Monday on worries about the sustainability of recent better-than-expected results from banks after Bank of America reported a big increase in troubled loans. The Dow Jones industrial average fell 289 points or 3.56 percent and closed at 7,841, while S&P’s 500 index and Nasdaq Composite index declined 4.28 percent to 832 and 3.88 percent to 1,608 respectively.

On the data front, the index of U.S. leading economic indicators in March fell more than forecast, indicating any recovery from what may be the longest recession in the postwar era is still far away. The index fell 0.3 percent after a 0.2 percent drop in February and it was larger than consensus forecast of 0.2 decline.

On Tuesday, economic data releases include German PPI data and ZEW survey, U.K. CPI and RPI data, eurozone ZEW survey, and Canada BOC rate decision and wholesale sales.