The dollar index traded to the highest levels since April 2006 with the dollar getting a broad based boost on Monday morning in Asia from fresh financial fears on news that AIG would need $30 bln more in bail-out funds, and in market disappointment in the EU summit on the weekend, that failed to provide any concerted support for Eastern Europe. Risk aversion is aiding the USD with Asian stocks broadly lower, some falling over 3% on the day. U.S. treasury yields fell back sharply on safe haven flows. Also, expectations of rate cuts and quantitative easing measures by the by the RBA, BoC, ECB and BOE this week, also helped underpin the USD. EUR-USD gapped lower at the open from NY closing levels of 1.2680 to 1.2620 and proceeded to fall to lows of 1.2545. Sterling gapped from levels of 1.4320 in late NY to 1.4270 and then dropped to 1.4180. USD-JPY saw choppy trading in a range of 96.92-97.92 with the bounce off the lows fueled by a EUR-JPY bounce off 122.00, just as the cross bounced in Friday in NY. NYMEX crude dropped $1 on global demand woes, falling under $44 though gold bounced over $13 on risk fears. Of note, the KRW saw intervention but closed at the weakest since March 1998. The CLSA PMI for China showed a bounce, and while still showing a contraction at 45.1, raised hopes for a recovery
