NEW YORK (Dow Jones) --Risk appetite continued to wane Wednesday morning in New York, as concerns about the global economy, civil unrest in China and falling crude oil prices drive investors to safe-haven currencies, the dollar and the yen.
Worries about the sustainability of economic recovery have overshadowed optimism over "greenshoots" indicating a turnaround was underway. The renewed wave of risk aversion has bolstered the yen against all its rivals as investors seek to escape riskier positions. The flight to safety has supported the dollar against many higher-yielding counterparts, but the greenback has declined versus the yen.
Civil unrest in China's Xinjiang Uighur Autonomous region is also taking a toll on sentiment, as Chinese President Hu Jintao scrapped his plans to attend to attend the summit of the Group of Eight industrial nations and emerging economies in Italy, which starts Wednesday.
This news may further undermine expectations of significant developments at the meeting since China had been one of the countries said to have been promoting the idea of an alternative currency, UBS analyst Ashley Davies wrote in a note.
Leaders from the G8 are expected to say in a statement later Wednesday that although there are some signs that their economies are improving, significant risks to the economic outlook remain.
The G8 draft states that "the turning point in the economies will be strengthened when our measures will reach their full impact on economic activity and will contribute to improve confidence."
The draft has no specific mention of exit strategies, or how G8 leaders plan to unwind the massive stimulus they injected to come out of the recession. As expected, it doesn't mention foreign exchange.
Slumping crude oil prices, which dipped to around $62 a barrel in recent trading, were yet another indicator of concern about the global economy's overall health.
The economic data calendar remained light, with investors focusing on more glum figures, such as Japan's 3.0% fall in core machinery overs, over the few bright spots, like the rise U.K. sentiment and better-than-expected German factory orders.
In early New York trading, the euro was little changed at $1.3908 from $1.3912 but dipped to Y131.20 from Y131.91 late Tuesday. The dollar had fallen to Y94.29 from Y94.82 late Tuesday, according to EBS.
The dollar was also at CHF1.0898 from CHF1.0897, but the Swiss franc was strengthening against the sinking euro. Although at CHF1.5160, the euro is still trading well above the so-called line in the sand of CHF1.50, the market remains wary of more intervention from the Swiss National Bank to push the franc lower. The pound, meanwhile, fell to $1.6096 from $1.6128.
