Investors are fleeing for safety as Asian stocks suffered a big loss after much weaker than expected data in the US and Europe fuelled fears of a recession sending investors to safer bonds. Markets worldwide have buckled this year amid concerns that the sharply slowing US economy will drag on global growth and on signs of more critical mortgage related problems in the financial sector.

While the UK and US central banks have been lowering rates, the ECB though is facing slowing global markets spreading to Europe and fears a recession in the US, yet it stands firm. The question remains how far will the ECB stand for and while it is likely to hold rates steady tomorrow yet the storm is getting stronger and some think the ECB will have to avoid its anti-inflation credibility and take other factors into consideration, hence reducing rates this year. Unwinding of carry trades dominates the market as the euro gradually drops against the dollar dragging the pair with it to record at this hour a low of 1.4590 after recording a high of 1.4660.

The Bank of England is widely expected to lower interest rates tomorrow as it attempts to shore up confidence in the slowing economy. However it looks like the central bank is facing a difficult time as it needs to balance the situation particularly, with inflationary pressures now in the picture driven from higher energy and food prices.

The British pound continues to drop against the dollar as sluggish economic activity and turbulence in the financial markets weighs on the falling pound pushing the pair to the downside to record a low of 1.9559 after recording a high of 1.9662.

The dollar slipped against the yen early this morning as worry over risks of a US recession weighed on the greenback and stocks declined pushing the pair to the downside to record a low of 106.30 after recording a high of 106.71. However, it looks like the dollar is gathering momentum as it gradually started to incline against the yen.