Dollar slips against leading currencies

Dubai: The dollar dropped against leading international currencies, including emerging market currencies in early trade on Monday. 

The greenback slipped a new record low against the Swiss franc and fell for a second day versus the yen after Standard & Poor's downgrade of the US. 

The euro advanced on Monday after the European Central Bank signaled it's readiness to start buying Italian and Spanish bonds to curb the region's debt crisis. Against the euro, the dollarr declined to $1.4366 from $1.4282 this morning.

The yen gained versus most major peers as Asian shares slid for a fifth day, supporting demand for Japan's currency as a refuge. 

Most Asian equities traded lower and gold is more than 2 per cent higher, breaking the $1700-level at noon in Asia. In currencies the dollar has regained some lost ground since the open. 

"The CHF has been the major beneficiary of today's moves so far; the currency is up 1.6 per cent against the dollar at 0.7555. Perhaps surprisingly, Treasury yields are actually lower now than where they closed Friday. It seems one could make the argument that risk-off trades today are more based on global fears than US-specific concerns, given that Treasury bonds appear to have retained their safe-haven status after the downgrade," Nick Stadtmiller, Fixed Income Analyst at Emirates NBD wrote in market commentary. 

Analysts see the kneejerk dollar rally against G10 currencies is likely to be focused against higher-yielding and growth-oriented, commodity currencies. The greenback's performance against the ‘safe havens' such as the yen and Swiss franc may be more mixed, suggesting short-term value in selling commodity currencies against the yen and Swiss franc. 

"Left to natural market forces, dollar yen exchange rate would be very likely to break to fresh all-time lows below 76.25, but we think it is highly likely Japanese officials will intervene again. Similarly, CHF looks likely to appreciate against both the EUR and the USD at the outset of this week, and reach new historic extremes beyond 1.0711 and 0.7579, respectively," Standard Chartered said in a note outlining the market implications of the US rating downgrade.