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The US dollar fell to a new record low against the Euro and 3 year low against the Japanese Yen as confidence in the once mighty greenback continues to subside.  Dollar weakness however was not universal with a further decline recorded against the Australian and New Zealand dollars but strength recorded against the British pound and Canadian dollar.  Commodity prices continued to hit record highs which explain the strength of the Aussie and Kiwi.  However the Canadian dollar failed to join the party as a sharp drop in GDP weighs on the Loonie.

Manufacturing activity for the US held in line with expectations as the ISM Manufacturing index slightly fell from 50.7 to 48.3, and remains well above the typical recessionary level of 41.  The minor decline in manufacturing activity was softened as US exports strengthened, and helped to ease recessionary fears for the economy. Following the ISM release, the repercussion of the housing crisis continued to drive home prices lower as the RPX Composite fell to minus 7.24 percent from minus 4.17 percent, with Construction Spending falling for the fourth consecutive time. Construction Spending fell at its fastest pace in 14 as it plunged to minus 1.7 percent from minus 1.3 percent, and will persist to be a growing concern as the housing market has yet to show any signs of a recovery.

The stock markets swayed back and forth as the US economy faced mounting growth pressures, but was able to hold up later in the session. The DJIA lost 7.49 points to stay at 12,258.90 as Boeing and United Technologies Corp posted the biggest fall in prices, while Alcoa and Caterpillar led the advancers. Among broader indices, the S&P500 rose a modest 0.71 points to hold at 1,331.34 points as Diebold and MF Global shares gaining the most, while IFC Capital and Thornburg Mortgage coming out as the forerunners for the losers.

US Treasuries were up as increased volatility in the securities market sent risk adverse investors seeking the safe haven of risk free bonds, and but came under pressure as equity prices accelerated by the afternoon. By the end of the session, the benchmark 10-Year yield climbed to 3.55 percent, while the 2-Year yield jumped to 1.63 percent.

Looking ahead, all eyes will be focused on the rate decisions by the RBA and the BOC, and will bring an eventful day of trading as the RBA is expected to raise key rates while the BOC is looking to cut rates. Following the rate decisions, we will get another look at the ABC Consumer Confidence index which is expected to hold at its 14 year low.