Treasury Pulse

Global forex market

RISK off environment continued for the second week. The US dollar rallied as the weakness in the stocks on the back of mining and energy stocks and worries over the pending US government spending cuts fuelled a safe haven bid. There were unconfirmed rumours that a large US based commodity hedge fund was in trouble and was behind the sharp slide in commodity prices. Also, the January Federal Open Market Committee (FOMC) minutes did not paint a clear picture of the policy bias of the committee. There was no discussion on applying outcome-based rules to asset purchases but near-term projections were revised up relative to December, in large part due to a more modest assumption on fiscal drag.