The Swiss franc held hefty gains in Asia on Wednesday, having rocketed to record highs as investors scrambled for a safe haven on renewed tensions in the euro zone debt market and worries about a global slowdown.
Commodity currencies like the Australian dollar were among the hardest hit, while the yen was relatively steady against the U.S. dollar as markets were wary of intervention to weaken the currency after recent jawboning from Japanese authorities.
"That's keeping the yen from rallying as much as the other safe havens. The rhetoric was certainly ramped up significantly yesterday," said Greg Gibbs, strategist at RBS in Sydney.
Even Moody's affirmation of the United States' prized triple-A credit rating failed to calm jittery markets. Moody's announcement followed congressional approval of a deficit cutting plan that would pave the way for the U.S. to lift its debt ceiling.
Instead, markets focused on more weak U.S. data, following a batch of dour manufacturing surveys on Monday. Latest figures showed U.S. consumer spending dropped in June for the first time in nearly two years and incomes barely rose.
"There certainly has been weaker numbers globally, particularly out of the U.S. There is already a high level of uncertainty in global markets and that's another layer which is impacting on sentiment," Gibbs added.
The souring mood saw investors make a beeline for safe-haven assets including the Swiss franc and gold, which hit a record high .
The dollar last traded at 0.7655 Swiss francs , having plumbed a record low near 0.7610 overnight. The euro skidded to an all-time trough around 1.0795 francs before edging back to 1.0851.
The Swiss franc rallied against the yen, rising above 100 yen for the first time since August 2008.
Against the greenback, the euro also lost ground, falling as low as $1.4149 following a selloff in peripheral euro zone bonds, which drove Italian bond yields to a 14-year high. It last traded at $1.4184.
That prompted Italian financial officials to hold an emergency meeting and issue a statement saying the Italian banking system remained stable despite the turmoil it said was created by uncertainties on international markets.
"With the U.S. debt ceiling debate, which had been a key focus of global investors in recent days, having reached a resolution for now, investor focus has again swung back to the festering sovereign debt crisis in the euro zone," said Samarjit Shankar, managing director of global foreign exchange strategy at BNY Mellon.
"It is abundantly clear that market participants have little confidence in the success of the patchwork of solutions that have been discussed by euro zone policymakers thus far, and the ongoing discord relating to possible measures is fueling contagion risks."
Heightened risk aversion took a heavy toll on riskier assets, with stocks and commodity currencies bearing the brunt of the market's furor while Treasuries soared.
The Australian dollar dropped more than two full cents to last stand at $1.0753. Traders said a daily close below the $1.0775 area will signal yet another failure at $1.1032-1.1083 major long-term resistance, a negative signal for the currency.
The move also came a day after the Reserve Bank of Australia sounded less certain about the global economy and left interest rates unchanged for a nine straight month. (Additional reporting by Reuters FX analyst Krishna Kumar; Editing by Wayne Cole)