Despite strong US economic data today, risk aversion reared its ugly head shortly after the ISM and home sales data. Rumors that a large US bank had failed started the jitters, followed by talk of defaults by hedge funds and smaller banks. No concrete news on the financial front was unearthed.

As the session wore on, underwhelming auto sales data despite the cash for clunkers program from the US (the biggest beneficiaries were Toyota and Honda) reinforced fears that the consumer remains on strike. Stocks fell more than 2% and stayed down all afternoon.

EUR/USD triggered stops below 1.4200/05, falling to 1.4180; GBP/USD hit 1.6150 stops and AUD/USD saw heavy sales below 0.8340. 0.8245 briefly. Trendline support at 0.8250 won out in the near-term though AUD/JPY selling weighed late in the day.

USD/CAD was underpinned by news that the Liberals will look to unseat PM Harper at the earliest opportunity; likely a budget vote in early October.

Watch asset markets overnight; if Asian sahres can withstand the US slide, covering of risk-averse trades could see range-trade resume.