USD - The USD begins the week higher against nearly all of its major counterparts as a renewed wave of risk aversion overtakes global markets, and as the US's fiscal struggles fall to the wayside with European debt once again coming into the spotlight. After last Friday's abysmal jobs report in the US that showed the labor market stagnating in August, global financial markets have been hard hit with the DJIA and S&P both starting the trading week down nearly 3%. Investors have thus turned to the dollar as a relatively safe investment. Demand for the dollar has also been particularly strong this morning after the CHF, another safe-haven currency, tumbled by more than 8% against the dollar after the SNB pegged the franc's downside at 1.20 with the EUR, a full 10% lower than its pre-announcement levels. This morning, investors took note of slightly better than expected ISM non-manufacturing data, registering 53.3 versus last month's reading of 52.7 and the forecasted 51.0. The rest of the shortened week is light on economic data with the Fed's beige book due on Wednesday, weekly jobless claims and trade balance on Thursday and wholesale inventories on Friday. The dollar has moved back towards the stronger end of its summer ranges, and appears poised for a breakout against its main counterparts such as the EUR, GBP and CAD should Europe's debt crisis intensify further.

EUR - The euro dove to a 6 week low vs. the dollar on resurfacing concerns over Greece and Italy while the Swiss central bank actions to defend the franc also contributed to the volatility. The single currency fell below $1.40 as lack of fiscal progress in Greece has put an aid payment in danger while in Italy's Prime Minister Berlusconi, struggled to secure backing for a reform package amid nationwide strikes. Senior officials from the EU, IMF and ECB suspended talks on a new aid payment for Greece last Friday over the country's failure to meet its deficit targets. The renewed concerns for both countries come amid signs that European growth is slowing. Eurozone's GDP rose a scant 0.2% in the 2nd quarter as household consumption declined for the first time in nearly two years. Europe's workhorse, Germany, reported a -2.8% decline in industrial orders for July, a sign that the slowdown gripping the region is broad based. Meanwhile, in a surprise move, the Swiss National Bank announced it would not tolerate an exchange rate below CHF 1.20 per euro and would defend the target by unlimited market intervention. The announcement immediately sent the EURCHF rate up by 10% from its near historic lows. The euro appears set for further volatility as slowing growth, worries over its member countries, and market intervention by its trading partners converge on the beleaguered single currency.

GBP - The pound is trading at its lowest level against the dollar in almost two months after a report showed confidence in the outlook for employment weakened and a services index slid by the most in almost a decade. The reports have boosted the case for more stimulus measures and have the Bank of England, once again, contemplating quantitative easing in the coming months. Futures indicate that higher interest rates are now not expected until 2013. This week brings manufacturing data, industrial production, PPI, and the BOE announces rates - expected to remain at 0.50%.

JPY - The JPY is weaker, down 0.3% against the USD from yesterday's close, though it has retraced some of the losses seen following the Swiss National Bank peg announcement in regards to EUR-CHF. The new finance minister, Azumi, has announced that he will raise his concerns over the strength of the yen as he meets his peers at Friday's G7 meeting in France. USDJPY remains near record lows, though technicals suggest a potential bottoming at present levels.

CAD - The CAD is weaker this morning as the selloff in global equity markets intensifies a day before the BoC meets. The futures market is currently indicating that odds are about evenly split that the Bank will either leave rates on hold or cut before the end of the year. The CAD closed out its third-straight monthly loss last week as concern mounts that a worsening global slowdown will crimp demand for Canada's exports and after a report unexpectedly showed that the economy shrunk in the

second quarter. However, the loonie pared some of its early losses, after the encouraging ISM report out of the US. With few other major economic reports due this week, the CAD will struggle to post any sustainable gains with parity with the USD clearly in range.

MXN - The MXN is again towards the bottom of its recent ranges on growing concern that the slowdown in the US will weigh heavily on Mexico's economy. The peso has also extended its recent losses on increased bets that Mexico will follow the example of Turkey and Brazil and cut interest rates as soon as next month, a sharp departure from bets of rate increases just a week ago. Investors will take note of CPI data due this Thursday that is expected to show that inflationary pressures are easing, thus giving the central bank more room to lower interest rates in the near term as a shield against a looming economic slowdown in the world's largest economies.

AUD - The AUD is lower after the RBA kept rates at the current 4.75%, extending the longest period of policy stability in more than five years. The RBA has been on hold since last November as policymakers fear that an appreciating currency will snuff out the country's economic expansion as its major export markets (China, Japan, the US and Eurozone) all struggle to grow. Nevertheless, the AUD remains within its recent ranges as investors increasingly turn to it as a relatively safe currency, especially as the traditional safe-havens undergo extreme changes (e.g. the CHF).