The greenback strengthened against major currencies except Yen on Monday as the World Bank said that the outlook for the global economy remains 'unusually uncertain', investors increased concern about global economic recession and shift their capital from high-yielding assets to the Dollar and Yen. Iran’s political risk also encouraged safety demand (Government said that at least 17 people killed in the turmoil).

German Ifo business climate index rose to 85.9 in June (previous reading was 84.3), better than forecasts of 85.2, however, the figure didn’t give great boost to euro and the single currency fell to 1.3826 per U.S. dollar as concerns over Eurozone’s economic and fiscal outlook remain. Euro weakened to 132.50 versus the Japanese Yen before stabilise. EURGBP fell to 0.8400 in European session but has rebounded strongly to 0.8487 in New York afternoon.

British pound has weakened across the board due to cross selling in sterling and fall to 1.6320 in late New York session. Cross unwinding against euro after reaching 2009 fresh high at 0.8400 added pressure to price. Sterling fell to 156.44 versus the Yen as investors stay cautious after the comment from World Bank.

High-yielding currencies slipped on worries about global economic outlook. The Aussie dropped 2 percent to 0.7859 U.S. dollar, while Kiwi and the Canadian dollar fell to 0.6288 and 1.1557 respectively against the greenback. AUDJPY also tumbled to 75.33.

The Dollar index, which tracks the greenback performance against the six major currencies, gained 0.8 percent to 80.87. Recession concerns also gave pressure to the equity markets, the Dow tumbled 200 points to 8339, S&P 500 and Nasdaq fell to 893 and 1766 respectively. Commodities also under heavy selling, gold declined to five-week low at 918.80 while crude oil dropped to 66.93.

Investors are awaiting the U.S. FOMC meeting later this week. The market is expecting a slightly optimistic economic view but will continue to keep an eye on the after-meeting statements for any hint on future economic outlook. Economic data to be released on Tuesday include leading indicators in Japan, Gfk index, manufacturing and service PMI in Germany and Eurozone, Trade balance in Switzerland, and U.S. exiting home sales.