The US dollar plummeted to fresh record lows on a trade-weighted basis, leaving the Euro at all-time highs and the Canadian dollar just short of 33-year peaks. Traders sold the dollar on speculation that the upcoming G7 meeting would provide little guidance on the future of greenback trends. Official commentary on dollar weakness has been mixed through recent days, dashing hopes for verbal intervention to stem the greenback’s declines.

The euro scaled fresh record heights of $1.4309 through morning currency trading, and the British Pound remained similarly bid at three-month highs of $2.0512. The forex carry trade strategy was substantially lower, as the low-yielding Japanese Yen and Swiss Franc were the largest gainers through the afternoon—adding 1.0 percent and 0.9 percent, respectively.

Economic data was partly to blame for the dollar’s decline, as disappointments in Jobless Claims and Leading Indicator reports boosted expectations for Federal Reserve Interest rate cuts through year-end. Federal Funds Rate futures now price in an approximate 70 percent chance that the central bank will cut interest rates by 25 basis points in its October, 31 meeting—a clear shift from the 40 percent chance just a week ago. Worsened expectations for US dollar yield differentials have kept the currency on offer, and a further deterioration could only sink the greenback further. Such downward pressures only exacerbated the sell-off ahead of the upcoming Group of Seven Financial Ministers summit in Washington DC.

Strong price movements were likewise seen in US stock markets, with a broad market sell-off forcing further carry trade tumbles. The Dow Jones Industrial Average shed a 40 points off of yesterday’s close, falling near monthly lows to 13,853. Worsened outlook for domestic corporations led the highly diversified S&P 500 0.5 percent lower to 1,434, while the NASDAQ Composite lost 0.4 percent to 2,781.

Continued market skittishness unsurprisingly boosted government Treasury bonds, with the yield on the 2-year note dropping 7 basis points to 3.91 percent. Longer-dated debt was likewise affected, as the 10-year note yield eased 5bp to 4.50 percent.

David Rodriguez is a Currency Analyst at FXCM.