Crude oil dipped to its lowest level since September 2010, reaching US$74.95 a barrel in early New York trading today on mounting concerns that a Greek debt default could spread across the banking system and threaten the global recovery.
As commodity markets plummeted, equity markets hit a fresh 15-month low.
The ongoing debt crisis in Europe has made investors risk averse and has pushed them to protect their assets in safe havens such as the very liquid US dollar and US Treasuries. The greenback has reached its highest value in more than eight months against a basket of major currencies.
A stronger dollar can pressure dollar-denominated commodities prices by making them more expensive for consumers using other currencies.
Meanwhile, commodity price-sensitive currencies also suffered, such as the Canadian dollar and Australian dollar.
The Canadian dollar extended losses in US session trading against its U.S. counterpart to hit its weakest level since August 2010 as USDCAD surged to 1.0634 by 10:30 am New York time.