The financial markets are in risk aversion mode this morning, following losses across all major stock indices and words of caution from the Federal Reserve, warning about a slower than expected economic recovery. As a result, the Dollar Index has gained almost 0.8% over the last 24 hours with investors once again looking for the safety of the American currency. Seasoned operators have been taken by surprise, as a retail crowd using leveraged products placed big bets on dwindling shares, forcing prices up and generating unexpected losses for large traders that were short selling those same securities. Some hedge funds had to close positions in rising stocks, in order to cover losses, triggering a sentiment of unease and surprise that spread across the markets and resulted in the biggest daily loss of the last three months for the major stock indices.
