Risk aversion continued overnight as Asian stock markets traded lower.

The Nikkei 225 plunged by 3.55 per cent experiencing its largest percent drop since early June as investors fear that a stronger yen will hurt the export-driven economy. The US dollar traded mostly mixed, the yen remained at elevated levels, and the Swiss franc (CHF) was the most notable having outperformed the safe haven currencies. €/CHF fell to new records lows touching just under 1.2900 and US$/CHF is nearing 2010 lows on a strengthening franc. US$/CHF has so far made session lows around 1.0175.

Japanese economic data came in stronger than expected last night. July preliminary industrial production was expected at -0.2 per cent but rose by 0.3 per cent up from the prior -1.1 per cent, July retail trade also printed better than expected at 0.7 per cent, and July housing starts surprised to the upside with a reading of 4.3 per cent. The positive economic data further supported the yen. US$/Yen declined to around 84.05 from session highs around 84.65 and has settled around current levels of 84.40.

As of now, European equities are trading lower across the board. Month-end flows and the heavy economic data stream today is likely to make for a volatile trading environment.