The dollar fell below 100 yen to reach a 12-year low this morning, while the euro hit a new record high above 1.56 against the US currency as recession fears sparked a fresh bout of risk aversion.

'This is a market that is focused on risk more than return and sentiment remains significantly negative that the market is wary about taking on board excessive risk,' said Divyang Shah at Commonwealth Bank.

The dollar dipped briefly below the 100 yen level for the first time since November 1995 to reach a low of 99.75. Speculation that the Bank of Japan could step in to intervene at these levels meant it failed to hold below 100, however.

The Swiss franc was another focus of safe-haven buying, with the dollar hitting a low of 1.0043 sfr, sparking talk of a breach of parity.

The euro also benefited from broad dollar weakness meanwhile, breaching the 1.56 usd mark to hit a fresh record high of 1.5625 usd.

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