Risk appetite has improved, with stock markets bolstered yesterday by stronger than expected US consumer spending data which helped relieve some of the worst fears about the economy there slipping back into recession. This sees traditional safe haven currencies under pressure.

The Swiss franc has been particularly hard hit, loosing more than 2% against the euro and dollar at one stage. Here, downside was compounded by Friday’s threat by UBS to charge clients a fee on deposits as a measure to discourage them from hoarding the CHF in recent volatile market conditions. The yen also traded lower against other majors. Commodity currencies, such as the NZD and AUD have been the main gainers from the risk on trades.

The better risk appetite has also provided some support to the euro and sterling, though trade in the latter was muted yesterday due to the UK holiday. Meanwhile, Friday’s speech by Bernanke has left some limited downside pressure on the dollar from his comments that the Fed would consider all policy options to support the economy at an extended September policy meeting. However, dollar/euro/sterling crosses were all confined to relatively narrow ranges yesterday and overnight.

Comments yesterday from Trichet that the ECB is reviewing the risks to price stability failed to dampen the euro. However, it has dropped back in early trading this morning, eroding yesterday’s modest gains to the dollar. Meanwhile, sterling also has a weaker tone at the open with a weak overnight CBI services sector survey weighing.