Forex today: Risk-off markets in Asia feed through to Wall Street, accompanied by Caterpillar's woes

• Forex today was smothered in risk-off blues following a disappointment on Wall Street when bellwether's earnings and projections Catapillar and Nvidia came in well short.

The US dollar was troubled on Monday and bleeding out with a drop in US yields. The US 10yr treasury yield fell to 2.74%, while the 2yr yield fell to 2.59%. Investors do not expect action from the Fed this week, and Futures markets are pricing in just a 1% chance of a hike in March. There is a 20% chance attached to the June meeting.

Meanwhile, as we wait for the outcome of Sino/US trade talks starting up again, China continues to play havoc on risk appetite. Today was the first day of a jam-packed week for US stocks with a tidal wave of earnings hitting the trading rooms. A negative mood in Asia yesterday transpired into much of the same in both the Europen and the US sessions, undermined by disappointing Q4 earnings reports attributed to China's dwindling economy and trade wars.

Caterpillar and Nvidia sent the benchmarks off a cliff after weaker-than-expected quarterly earnings and guidance from Caterpillar, along with a sizeable revenue forecast cut from chipmaker Nvidia, stoking fears about the Chinese economy slowing. Caterpillar shares fell 9.1 percent and Nvidia, meanwhile, dropped 13.8 percent. If this becomes a theme on Wall Street this week, investors will be on the lookout for emergency stimulus to sure up global growth, otherwise, risk-off sentiment is likely to see a flight to the dollar, CHF, yen and gold, weighing heavily on the high beta and commodity-FX. 

Currency action

Analysts at Westpac noted the stand-out price action in the G10s:

"There were only minor net movements in the major currencies. EUR/USD rose a net 0.2% to 1.1430. GBP/USD slipped -0.3% to 1.3160, still close to 3-month highs. USD/JPY fell from 109.50 to 109.16 then trimmed losses.

AUD/USD had rallied to just above 0.7200 in Asian trade, obviously thinned by the Australia Day holiday, then succumbed to the soft global risk mood, back to 0.7170. NZD/USD had also rallied in Asia but is flat on the day at 0.6830. AUD/NZD ranged sideways between 1.0475 and 1.0495."

Key notes from US session:

• DJIA slips back into highly negative territory on key week; investors bracing for rollercoaster ride

Key events ahead:

At 00.30 GMT, 11:30am Syd/8:30am Sing/HK, we see Jan Australia business confidence from NAB.