The US Dollar is beaten black and blue on asset diversification talk

The greenback was hammered across the board in the US session as well as in the early Tokyo trades as South Korea’s Central Bank indicated that they are looking at diversifying their reserves out of the dollar.
The US currency faced intense selling pressure against the international majors as the world’s fourth largest reserve holder signaled plans to diversify its foreign exchange reserves into high yielding currencies. Euro soared past the 1.32 mark to touch a 6-week peak while sterling rallied nearly 2 cents to kiss a month-and-a-half peak of 1.9134.
Capitalising on dollar weakness the Japanese Yen skyrocketed to a 3-week high of 103.82 but the dollar was bought back almost immediately vis-à-vis the yen as data release indicated a big slowdown in Japanese exports in January.
Australian dollar was another major beneficiary in this asset diversification talk as it surged to a 12-month high, breaking the 0.7950 barrier.
Other currencies that send the greenback tumbling include the New Zealand dollar, which escalated to a 22-years peak and the Canadian dollar, which touched a 4-week high inching towards its 100-day moving average.
A 6 per cent climb in the price of crude oil to more than $51 a barrel along with the retreat of the dollar on fears of central banks reducing their exposure to dollar assets combined to hit Europe’s bourses hard on Wednesday.
The FTSE Eurofirst 300 fell 1 per cent to 1,080.07 with the Xetra Dax in Frankfurt down 1 per cent to 4,280.54, the CAC-40 in Paris off 1.2 per cent to 3,955.04 and the FTSE 100 in London 1.2 per cent lower at 4,974.0, its first time below 5,000 for a fortnight.
Wall Street suffered its biggest single-day decline of the year on Tuesday, after investor jitters over the rising price of oil and a sharp fall in the dollar sparked a sell-off.
The Dow Jones Industrial Average fell 1.6 per cent to 10,611.13, and the S&P?500 lost 1.5 per cent 1,184.22 - the biggest single-day fall for both indices since August last year. The Nasdaq Composite dropped 1.4 per cent to 2,030.32. US futures suggest the Dow will ease 5 points at the start.