The Swiss franc climbed to a record against the dollar and the yen strengthened to a two-week high as continuing violence in Libya drove energy prices higher and stocks lower, spurring demand for safer assets.

The two currencies gained against almost all major counterparts as loyalists of Libyan leader Muammar Qaddafi sought to crush dissent in the capital Tripoli. The euro traded within a cent of its strongest level in three weeks against the dollar on speculation the European Central Bank will increase interest rates before the Federal Reserve. Australia's dollar advanced for a second day after data showed business investment rose in the final three months of 2010.

"The situation in the Mideast and Libya appears to be deteriorating," said Tsunemasa Tsukada, chief manager for currencies and financial products in Tokyo at Mitsubishi UFJ Trust & Banking Corp., a unit of Japan's largest financial group by market value. "Investors are probably reducing risk right now, with money likely to go into the yen and the Swiss franc."

The franc reached a record 0.9267 centimes per dollar before trading at 0.9271 as of 8:47 a.m. in London from 93.30 yesterday in New York. The yen strengthened 0.8 percent to 81.87 per dollar its seventh straight day of gains. The yen was 0.7 percent stronger at 112.63 per euro.

Eoin Treacy's view The current heightened anxiety over the threat to Libyan oil supply has been very oil centric with Brent crude and WTI crude surging earlier this week. Both pulled back sharply today as the threat of Saudi political unrest diminished and as additional supply was promised from Saudi Arabia's reserves. Ancillary markets such as gasoline and heating oil have performed in line with oil. However, a knock-on effect has been absent from coal, uranium and natural gas prices. This may demonstrate the higher speculative interest in more liquid crude oil contracts as well as the lack of a threat to supply for other energy resources. This would also suggest that without a motivating political factor crude oil prices could fall back to the medium-term trend as quickly as they have pulled away from it.

Regardless, higher crude oil prices act as a tax on consumption and have put pressure on global stock markets, many of which are rather overextended relative to their 200-day MAs and were susceptible to a pull back and consolidation of gains. Assets commonly thought of as safe havens have so far been slow to rally which is probably more reflective of the fact that stock market reactions (the Nasdaq 100 for example) have so far been limited in size to those posted in November. However, since this crisis has the potential to rumble along for a while longer, I thought it might be worthwhile taking a look at what assets are most likely to acquire safe haven status in such a scenario.

Oil remains volatile and at susceptible to additional large moves both up and down as the political news ebbs and flows. Today's action suggests that a high of at least near-term significance has been reached and a significant additional deterioration will be required for prices to surge higher again. However, recent price action demonstrates how vulnerable the global economy is to high oil prices. Expensive energy is again a headline story and will remain a cause for concern among many investors for as long as it remains in the region of $100.

Gold has pushed back above $1400 for the fourth time since November and has so far sustained the gain. It will need to sustain a move to new highs to reaffirm the medium-term uptrend.

US Treasuries failed to hold the break below 119, took out an MDL stop (Mid-Point Danger Line as taught at The Chart Seminar) yesterday and are now pressuring the upper side of the short-term range. A clear failure at this level would be required to question potential for some additional upside. There has been a reasonably high degree of commonality in other sovereign bonds but US Treasuries have had one of the larger rallies.

The Dollar has been in a decade long downtrend against the Swiss Franc and hit a new low today. It distributed below $1 from September and appears to be in the process of reasserting the downtrend at present. A sustained move above $1 would be required to begin to question the consistency of the medium-term downtrend. The Trade Weighted Swiss Franc Index confirms the Franc's strength against a basked of currencies. It found support in the region of the 200-day MA and a sustained move below 121.50 would be required to question the consistency of the medium-term uptrend.

The US Dollar has pulled back from the upper side of its four-month range against the Japanese Yen and is now testing the progression of incrementally higher reaction lows. A clear upward dynamic will be required to reaffirm support in this area and check potential for some additional downside.

Rising inflationary pressures in Singapore are likely to motivate the MAS to revalue the Singapore Dollar higher or allow it appreciate faster. The US Dollar remains in a 10-year downtrend against the Singapore Dollar and a break of the progression of lower rally highs, currently near S1.33 would be required to question the consistency of the medium-term downtrend.

The above spot rates suggest that the US Dollar is the least likely of the traditional safe havens to attract bullish interest on this occasion. That could change in the event of a larger pullback by global stock markets.