FOREX TRADING

United Kingdom’s Pound and Stocks Decline Due to Dubai’s World Delaying Debts

Dubai World, one of the key investment companies in Dubai, which is owned by the government, requested to postpone paying its debt to creditors until May of 2010; with liabilities worth $59 billion. The company was negatively affected by the credit crisis, which was believed to be the worst credit meltdown since the Great Depression.

The company has to pay back $3.5 billion next month, and the delay led to major credit rating agencies lowering government intervened companies. Borse Dubai Ltd. is the biggest shareholder of London Stock Exchange Group Plc. and due to the delay, we saw United Kingdom gilts climb as demand rose; while the pound and stocks plummeted heavily as investors turned to safer assets.

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Gold Rush Continues

U.S. Dollar Trading (USD) with the FOMC minutes confirming a low rate outlook for some time the market took this as a signal to sell the USD and during the day key levels were broken across the board whilst Gold continued to surge higher. October Durable Goods Orders were -0.6% vs. 2% previously. Also released, Weekly Jobless Claims at 455k vs. 501k previously. In US Stocks, DJIA +30 points closing at 10464, S&P +5 points closing at 1110 and NASDAQ +7 points closing at 2176. Looking ahead, Thanks Giving Holidays.

The Euro (EUR) Broke through the Key 1.5000 in late Asia and then kicked on to break major resistance and year highs at 1.5060 in the US session to finish the day at 1.5140. Broad USD weakness and strength in Gold and Oil helped underpin the move higher which opens up potential further gains. Overall the EUR/USD traded with a low of 1.4960 and a high of 1.5146 before closing at 1.5130. Looking ahead, October Private Loans are forecast at -0.5% vs. -0.3%.

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U.S. Third-Quarter GDP Growth Revised Down to an Annualized 2.8%

The second estimate of GDP growth for the third quarter was revised down to an annualized 2.8% from the first, or advance, estimate of a 3.5% increase. The third quarter continues to mark a return to positive growth after four quarters of decline. The downward revision was in line with expectations, which were lowered on the release of the worse-than-expected September trade numbers, construction spending and retail sales. Although the pace of GDP growth in the quarter represents a marked improvement from declines of 0.7% and 6.4% in the second and first quarters, respectively, it is indicative of an only modest recovery in economic activity.

The downward revision to overall growth came from three main areas — net exports, consumer spending and non-residential investment in structures — each reducing overall growth by 0.3 percentage points. Some offset was provided by slightly greater strength in capital spending on equipment and software (E&S) and government spending.

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European Market Update

German IFO survey hits 15 month highs; European bourses shakes off initial concerns over financial sector

ECONOMIC DATA

(MA) Malaysia Central Bank Interest rate maintains its overnight Rate at 2.00%; as expected

(RU) Russian Central Bank cuts its Refi rate by 50bps to 9.0%; In line with views

(FI) Finland Oct Unemployment Rate: 8.2% v 8.1%e

(GE) Germany GDP SA Q/Q: 0.7% v 0.7%e; Y/Y: -4.8% v -4.8%e; GDP NSA Y/Y: -4.7% v -4.7%e
(GE) German Q3 Final Private consumption: -0.9% v -0.4%e; Government Spending: 0.1% v 0.3%e; Imports: 5.0%e v 3.55e; Exports: 3.4% v 4.1%e

(SZ) Swiss Oct UBS Consumption Indicator: 0.867 v 0.671 prior

(FR) France Nov Business Confidence Indicator: 89 v 91e; Production Outlook: -9 v -9e; Own-Company Production: -3 v 1e
(FR) French Oct Consumer Spending M/M: 1.1% v 0.4%e; Y/Y: 3.5% v 2.3%e

(SP) Spain Oct Producer Prices M/M: 0.0% v 0.8%e; Y/Y: -4.2% v -3.1%e

(SZ) Swiss Q3 Employment Level Y/Y: 0.2% v -0.8%e; 3.96M 3.94Me

(NV) Netherlands Nov Producer Confidence: -5.6 v -6.5%e

(SW) Sweden Oct PPI M/M: -0.4% v -0.1%e; Y/Y: -1.8% v -1.6%e

(GE) Germany Nov IFO Business Climate: 93.9 v 92.5e (15 month high); Current Assessment: 89.1 v 88.0e; Expectations Survey: 98.9 v 97.3e

(NO) Norway Q3 GDP Q/Q 0.9% v 0.8%e; Mainland GDP Q/Q: 0.5% v 0.8%e

(UK) Q3 Total Business Investment Q/Q: -3.0% v -5.0%e; Y/Y: -21.7% v -22.9%e
(UK) BBA Loans for House Purchase: 43.2K v 44Ke

(SA) South Africa Q3 GDP Annualized: 0.9% v 0.5%e; Y/Y: -2.1% v -2.6%e

(EU) Euro-Zone Sept Industrial New Orders M/M; 1.5% v 1.0%e; Y/Y: -16.5% v -17.3%e

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities: Following a strong Monday session in which a three day downward trend was snapped, European markets gapped down in line with their Asian peers. Asian trading, specifically out of mainland China, was broadly negative as rebuttals from financials regarding capital raise speculation failed to restore confidence. Commentary from the Chinese Academy of Social Sciences supporting stronger capital controls fueled concern. Follow-through from this concern has hit the European financial sector with the large cap banks leading the downward trend.

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European Market Update

USD finds it hard to be loved; Gold hits fresh all-time highs near $1,1170/oz; Stocks aided by rising risk appetite

ECONOMIC DATA

(HU) Hungary Sept Retail Trade Y/Y: -7.3% v -6.8%e

(TT) Taiwan Oct Industrial Production Y/Y: 6.6% v 5.6%e; Export Orders Y/Y: 4.4% v 4.0%e
(TT) Taiwan Oct Unemployment rate: 6.0% v 6.1%e

(FR) France Nov PMI Manufacturing: 54.2 v 56.0e; PMI Services: 60.4 v 57.8e

(SZ) Swiss Oct Money supply M3 Y/Y: 7.7% v 7.7% prior

(GE) Germany Nov Advanced PMI Manufacturing: 52.0 v 51.6e; PMI Services: 51.5 v 51.2e

(IC) Iceland Oct Wage Index M/M: 0.3% v 0.3% prior; Y/Y: 1.9% v 1.9% prior

(EU) EU Nov Advanced PMI Manufacturing: 51.0 v 51.2e; PMI Services: 53.2v 52.9e; PMI Composite: 53.7 v 53.4e

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities: European markets have entered the abbreviated US week on a light tone. Rebounding from last week’s equity declines, markets have been supported across the board by the ‘global recovery’ story and new multi-year and all time highs in commodity prices. Corporate news, much like trading volumes have been thin with a relatively quiet weekend and pre-market session. Lloyds [LLOY.UK] announced the completion of the first stage in its multi-stage capital raise plan and Heritage Oil [HOIL.UK] confirmed sale of certain Ugandan license stakes to Italian firm ENI [ENI.IT]. Following commodity rises, basic resources and heavy industrial names have been the outstanding players throughout the session.

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Euro Set for Further Losses

The main attention over the past few weeks has been on the US economy and dollar. There has been a tentative shift in sentiment over the past few days and there is a strong probability that the Euro-zone will be in greater focus over the next few weeks. The structural weaknesses are still very important and the bad-debt situation in the banks has not been dealt with during 2009. Credit conditions are also liable to deteriorate.

Option expiry is liable to trigger further volatility in the very short term with immediate Euro support at 1.48, but the net risks suggest that the Euro will weaken to 1.4650 against the dollar next week.

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USD Lower, Housing Starts Fall 10.6% and Stocks Slide

• USD: Mixed, housing starts and building permits drop sharply, CPI rises
• JPY: Lower, JAL may be on the verge of bankruptcy, monitoring the debate over the Yuan
• EUR: Higher, current account slipped to deficit, construction output falls, gains in cross to GBP
• GBP: Lower, MPC split on quantitative ease, discussed possible cut in the remuneration rate
• CAD and AUD: AUD lower & CAD higher, Australia’s leading indicators rise, Canada’s CPI turns higher

Overview

After a two-day rally the USD was back on the defensive Wednesday pressured by the return of risk appetite as equity markets rally in Europe and gold trades at a new record high. A statement from Fed Chairman Bernanke that US interest rates would remain low for extended period and maybe longer if unemployment continues to rise appears to be the latest catalyst for the USD selloff. The fact that the Fed is not prepared to withdraw stimulus at this time fuels demand for commodities and contributes to improving risk sentiment.

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Another Day Brings Another Direction for the Greenback. Bank of England Minutes Show Diverging Views within the MPC

Fundamental market inputs tell confusing story for the USD – perhaps a reason for its erratic behavior of late.

MAJOR HEADLINES – PREVIOUS SESSION

• US Nov. HAHB Housing Market Index out at 17 vs. 19 expected and 17 in Oct.
• US Weekly ABC Consumer Confidence rose to -45 vs. -46 the previous week
• Australia Q3 Wage Cost Index rose 0.7% QoQ as expected
• EuroZone Sep. Current Account was -5.4B vs. +0.6B in Aug.
• UK BoE Minutes showed split vote of 1-7-1 for latest monetary policy decision
• EuroZone Sep. Construction Output fell -8.0% YoY vs. -10.0% in Aug.
• UK Nov. CBI Industrial Trends Total Orders rose to -45 from -51 in Oct.
• Canada Oct. CPI fell -0.1% MoM vs. +0.1% expected
• Canada Oct. Core CPI rose +0.1% vs. 0.0% expected
• US Oct. CPI rose +0.3% MoM and fell -0.2% YoY vs. +0.2%/-0.3% expected, respectively
• US Oct. CPI ex Food and Energy rose +0.2% MoM and +1.7% YoY vs. +0.1%/+1.6% expected, respectively
• US Oct. Housing Starts fell to 529k vs. 600k expected and 592k in Sep.
• US Oct. Building Permits fell to 552k vs. 580k expected and 575k in Sep.

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European Market Update

Risk appetite theme remains intact; Lack of non-conciliatory FX-rhetoric from the U.S.-China discussion

ECONOMIC DATA

(EU) EU Oct 25 Car Registrations: 11.6% v 6.3% prior

(SP) Spain Sept House Transactions Y/Y: -17.2% v -9.9% prior

(CZ) Czech Oct PPI Industrial M/M: -0.2% v 0.0%e; Y/Y: -4.6% v -4.5%e

(CZ) Czech Sept Export Price Index Y/Y: -4.3% v -2.7% prior; Import Price Index Y/Y: -9.3% v -7.2% prior

(TU) Turkey Oct Consumer Confidence: 80.5 v 81.9 prior

(TU) Turkey Aug Unemployment rate: 13.4% v 13.0%e

(SW) Swedish Oct Avg House Prices (SEK): 1.78M v 1.78M prior

(DE) Denmark Oct Wholesale Prices M/M: -0.3% v -0.1% prior; Y/Y: -5.3% v -7.6% prior

(RU) Russia Oct Producer Prices M/M: -0.9% v 1.3%e; Y/Y: -1.8% v 1.6%e

(IT) Italian Oct Final CPI NIC incl tobacco M/M: 0.1% v 0.1%e; Y/Y: 0.3% v 0.3%e

(IT) Italian Oct Final CPI-EU Harmonized M//M: 0.4% v 0.5%e, Y/Y: 0.3% v 0.4%e

(NO) Norway Oct Trade Balance (NOK): 27.4B v 22.6B prior

(EU) Euro-Zone Oct CPI M/M: 0.2% v 0.3%e; Y/Y: -0.1% v -0.1%e; CPI-Core Y/Y: 1.2% v 1.1%e

(IT) Sept Current Account: -€4.2B v -€3.2B prior

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Dollar Weakness Shown Early In The Week

Overall, the major pairs saw some minor spikes in price as the new trading week began. During the session, Japan released a report detailing their preliminary gross domestic product which has been shown to have increased to 1.2 percent over analysts estimates of 0.7 percent.

The euro (Eur/Usd 1.4957) opened the new trading week 10 pips higher as the pair raced ahead to the R1 swing point at 1.4965 which stopped the pair in its tracks. The gap, although minor, may still be closed if the pair decides to test the 20 day moving average at 1.4885.

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USD Trying to Rally, Though Volatility Looks Rather Muted so Far

Improved Jobless Claims sees bond yields higher, USDJPY trying resistance. US 30-year auction results up later.

MAJOR HEADLINES – PREVIOUS SESSION

• New Zealand Oct. Business PMI out at 50.6 vs. 51.5 in Sep.
• New Zealand Sep. Retail Sales out at 0.2%/0.0% MoM less Autos vs. 0.4%/0.4% expected, respectively
• Japan Oct. Domestic CGPI fell -0.7% MoM and -6.7% YoY vs. -0.1%/-6.0% expected, respectively
• Australia Oct. Employment Change rose 24.5k vs. -10k expected
• Sweden Oct. CPI out at +0.3% MoM and -1.5% YoY vs. +0.2/-1.6% expected, respectively
• EuroZone Sep. Industrial Production rose 0.3% MoM vs. 0.5% expected (YoY was -12.9% vs. -14.1% exp.)
• Canada Sep. New Housing Price Index rose +0.5% MoM vs. +0.2% expected
• US Weekly Initial Jobless Claims fell to 502k vs. 510k expected and 514k last week
• US Weekly Continuing Jobless Claims fell to 5631k vs. 5700k expected and 5770k last week

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Daily Technical Analysis

EURUSD

The EURUSD made another indecisive movement yesterday, still trapped in 1.5062 – 1.4930 range area. As you might already know, I have been paying attention on potential double top formation since the beginning of this week, as you can see in my daily chart below. Here are two double top scenarios I have in mind:

Valid: Double top is a bearish reversal pattern. With 1.5062/50 area considered as the peaks, failure to break above that area would trigger downside pressure, and once price break below 1.4850 the double top bearish reversal scenario is confirmed. Break below 1.4850 might also a violation to the major trendline support (blue) which potentially also trigger bearish reversal scenario.

Failure: A double top formation considered to be fail if price break above the peaks. I like to see it this way: A bearish reversal scenario failure usually produced the other scenario, bullish continuation with technical target remains at 1.5150 and 1.5300

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European Market Update

Perceived USD ‘benign neglect ‘further aids global risk appetite; Spot gold hits fresh all-time highs above $1,115/oz; BOE quarterly inflation report: Range of views in MPC over medium term prospects

ECONOMIC DATA

(CZ) Czech Sept Final Industrial Output y/y -11.9% v -11.9%; Construction Output Y/Y: 3.6% v 0.6% prior

(HU) Hungary Oct Consumer Prices M/M 0.0% v 0.2%e; Y/Y 4.7% v 4.8%e

(TU) Turkish Oct Capacity Utilization: 71.8% v 69.5%e

(NV) Netherlands Sept Industrial Production M/M: 1.1% v 0.4%e; Y/Y: -7.6 v -8.2%e; Industrial Sales Y/Y: -21.0 v -21.8% prior

(SW) Sweden Oct AMV Unemployment Rate 5.4% v 5.3%e

(CZ) Czech Sept Current Account (CZK): -3.7B v -4.5Be

(UK) Oct Claimant Count Rate: 5.1% v 5.1e; Jobless Claims Change: 12.9K v 20.0Ke
(UK) Sept Avg Earnings incl bonus 3M/y/y 1.2% v 1.4%e; Ex bonus 3M/Y: 1.8% v 1.8%e
(UK) Sept Manufacturing Unit Wage Cost 3M/Y: 3.2% v 3.7% prior

(GE) German IFO: Euro-Zone Q4 economic sentiment: Q/Q 74.6 v 63.6 prior; Expectations Q/Q: 107.0 v 93.0 prior

(UK) Bank of England Quarterly Inflation Report: Sees CPI below target around 1.6% in two years assuming market rate path and £200B QE measures. CPI to rise sharply above 2% target in short term but spare capacity to push CPI Back Below 2% from mid-2010 period.

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

In equities news overnight: European equity markets have seen strong buying since the open of trade. Positive sentiment rolled out of the Asian session following Chinese data that has continued to support a recovery story. China’s Oct commodity output figures showed continued y/y builds, sharply rallying the basic resource sector both in Asia and Europe. Equity strength took further bids on the back of solid earnings reported from France’s third largest bank Credit Agricole [ACA.FR] after the close on Tuesday and German utility E.on [EOAN.GE] and Italian banking group Unicredit [UCG.IT] in the Euro premarket. Ahead of UK employment data at 4:30EST, equities took a further leg up, this move was supported by UK data that showed the lowest build in jobless claims since April 2008. Leading sectors on the EuroStoxx50 included Financials, Utilities and Basic Resource names. Turnover volumes have been mixed, the CAC40 is printing well ahead of its averages due to interest in Credit Agricole and Axa, while the DAX and FTSE are trading off their moving averages.

In individual equities: Credit Agricole [ACA.FR] Reports Q3 net €290M v €145Me, Rev €4.8B v €4.6Be; names Jean-Paul Chifflet new CEO. || E.on [EOAN.GE] Reports 9-month EBIT €7.7B v €7.6Be, Q3 Rev €16.7B v €17.9Be; Guides 2009 Adjusted Net Profit down 3-5% y/y v prior down 5-10% y/y. || Unicredit [UCG.IT] Reports Q3 Net €394M v €360Me, Rev €6.7B v €6.7Be. || National Express [NEX.UK] Confirms 7 for 3 rights issue to raise £360M (69% of market cap). || Sainsbury [SBRY.UK] Reports H1 Pretax £307M v £302Me, Rev £11.2B v £10.3MBe; LFL +5.7%. || Holcim [HOLN.SZ] Reports Q3 Net CHF673M v CHF490Me, Rev CHF5.7B v CHF5.7Be. |

Speakers: China PBoC: again reaffirmed its pledge to maintain ‘moderately loose’ monetary policy as it noted that its external demand remained weak and questioned the fiscal stimulus sustainability as a potential risk to global economic recovery. The central bank noted that inflationary expectations were rising with commodity prices. The PBoC stated that its liquidity management was becoming increasingly difficult but would maintain reasonable growth in credit. It would improve Yuan exchange rate mechanism based on capital flows and major currency changes. It viewed the Chinese economy as stable and added that it forecasted a positive role of exports in 2010. || India Commerce Sec Khullar commented that he expected India’s exports to grow and turn positive on a annual basis by January || Australian Treasurer Swan commented that Western consumption would not be driving global GDP || Indian PM Econ Advisor noted that some monetary stimulus might have to be withdrawn by its central bank if inflation was higher by end 2009 with RBI taking steps in early 2010 || Asia-Pacific Economic Cooperation forum (APEC) draft statement noted that flexible exchange rates and interest rates were critical. The statement noted that large external deficits nations to pledge policies to support private savings while members with surpluses pledged to strengthen domestic consumption || German IFO noted that it was clear the USD and GBP were undervalued versus Euro but did not expect the USD to rise versus Euro over the next six months. The IFO expected increasing capital market rates and saw key lending rates rising over the next six months. The IFO duly noted that expectations were clearly up in Germany, Italy and Netherlands regions. || U.K. Treasury announced that the pre-budget report will be released on December 9th || Moody’s cuts Iceland’s sovereign ratings by two notches to ‘Baa3′ (lowest of Medium term grade) || UK quarterly inflation report: The BOE sees CPI below target around 1.6% in two years assuming market rate path and £200B QE measures. CPI to rise sharply above 2% target in short term but spare capacity to push CPI Back Below 2% from mid-2010 period. The BOE reiterated that the decline in the GBP to aid the UK trade position. BOE acknowledged there was ‘a range of views’ in the MPC over the medium-term inflation prospects.

In Currencies: USD was a touch softer against the European and commodity related currencies as the risk appetite theme remained in play after a slew of Chinese data released during the Asian session a rebound in Japan machinery orders. Fed’s Fisher benign neglect of the USD helped spot gold to test fresh all-time highs above $1,115/oz. The GBP fell sharply after the BOE quarterly inflation report. The BOE sees CPI below target around 1.6% in two years assuming market rate path and £200B QE measures. The BOE did note that CPI to rise sharply above 2% target in short term but spare capacity to push CPI Back Below 2% from mid-2010 period. The BOE also reiterated that a weaker GBP would aid to solve its imbalances. GBP/USD slumped a big figure to test 1.6650 ahead of the NY morning. EUR/GBP firmer by 70 pips to test 0.9030 area.

In Energy/commodities: Spot gold hits fresh all-time high aided by rising risk appetite and alleged benign neglect by US officials on the dollar outlook

In Fixed Income Supply: Government bonds are broadly weaker thanks to elevated risk appetite this morning in the European session. Yield curves subject to a bout of bear steepening on both sides of the channel whilst peripherals are firmer against the core. Borrowing from the ECB’s marginal lending facility jumped markedly to €3.4B overnight following yesterday’s draining operation and there was some surprise at the allotment at its 3 and 6 month tenders (€10.8B and €782M respectively) Germany sold just under €5B in new 10y Bunds with a weaker than average bid-to-cover of 1.4. Portugal sold €1B in 2014s with a healthy bid-to-cover of 3.4x. Gilts managed to recover lost ground and move into positive territory across the curve after the BoE’s quarterly inflation report, which on close inspection appears to be more dovish than initial appearances.

NOTES

Slew of Chinese data overnight: Retail Sales +16.2% v 15.7%e; Industrial Production: +16.1% v 15.5%e; New loans CNY253B v CNY370Be for 1-year lows

Fed’s Fisher: Watching ‘carry trade’ in USD for disorderly influence and saw ‘rather orderly depreciation’ of dollar now

Fed hawk Lacker: no hurry to start to remove stimulus yet, let alone start to hike rates

US Tsy Geithner: Strong dollar ‘very important’ for US

US bond markets closed for Veterans Day observance

APEC finance ministers will call for flexible interest and exchange rates – draft statement

Looking Ahead

12:00 (EU) ECB’s Weber to speak

13:30 (MX) Mexico Aug Gross Fixed Investment: -12.0% expected versus -14.1% prior

13:30 (MX) Mexico Sept Industrial Production Y/Y: -6.2% expected versus -7.3% prior

Trade The News Staff
Trade The News, Inc.

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European Market Update

German ZEW suggest that recovery is fragile; Currency rhetoric picking up from all angle

ECONOMIC DATA

(FI) Finland Sept Industrial Production M/M: -1.7% v 0.5%e ; Y/Y: -23.0% v -20.9%e

(GE) German Oct Final CPI M/M: 0.1% v 0.1%e; Y/Y: 0.0% v 0.0%e

(GE) German Oct Final CPI – EU Harmonized M/M: 0.1% v 0.2%e; Y/Y: -0.1% v 0.0%e

(FR) France Sept Industrial Production M/M: -1.5% v 0.5%; Y/Y: -10.4% v -9.2%e

(FR) France Sept Manufacturing Production M/M: -1.6% v 1.2%e; Y/Y: -11.0% v -10.5%e

(SW) Sweden Sept Industrial Production M/M: 0.2% v 0.5%e; Y/Y: -15.7% v -19.7%e

(SW) Sweden Sept Industrial Orders M/M: 0.7% v -4.2% prior; Y/Y: -12.1% v -18.1% prior

(DE) Danish Oct CPI M/M: 0.0% v 0.2% prior; Y/Y: 1.0% v 0.8% prior

(DE) Danish Oct CPI EU Harmonized M/M: 0.0% v 0.2% prior; Y/Y: 0.6% v 0.5% prior

(IT) Italy Sept Industrial Production M/M: -5.3% v -4.0%e; Y/Y: -15.7% v -15.8%e; Industrial Production NSA Y/Y: -15.3% v -13.8%e

(NO) Norway Oct CPI M/M: 0.2% v 0.0%e; Y/Y: 0.6% v 0.8%e

(NO) Norway Oct CPI Underlying M/M: -0.1% v 0.1%e; Y/Y: 2.1% v 2.2%e

(NO) Norway Oct Producer Prices M/M: 1.5% v -6.0% prior; Y/Y: -4.1% v -4.1%e

(SA) South Africa Oct SACCI Business Confidence: 82.2 v 85.5 prior

(UK) Sept Visible Trade Balance: -£7.2B v -£6.1B; Trade Balance Non-EU: -£3.8B v -£3.0B; Total Trade Balance: -£3.5B v -£2.2B

(UK) Sept DCLG House Prices Y/Y: -4.1% v -4.9%e

(GE) German Nov ZEW Econ Sentiment: 51.1 v 55.0e; Current Situation: -65.6 v -70.0e

(EU) Euro-Zone Nov ZEW Econ Sentiment: 51.8 v 58.0e

(IR) Irish Sept Industrial Production M/M: 11.2% v -16.1% prior; Y/Y: -0.7% v -13.0% prior

(SA) South Africa Sept Manufacturing production M/M: 3.1% v 0.8%e; Y/Y: -11.4% v -13.1%e

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G-20 Signals Green Light To Sell Dollar

The dollar plunged on Monday after G-20 finance ministers did not address the dollar slide and agreed to maintain the stimulus programs for the foreseeable future. UK Chancellor of the Exchequer Alistair Darling said the G-20 had decided to keep interest rates low and maintain record budget deficits until economic recoveries take hold.

Separately, the International Monetary Fund said the US currency may still be overvalued. Dollar carry trades returned while global stocks and commodities surged. Gold rose above $1,100 an ounce, a record high. Dow Jones 30 made a new yearly high. The S&P 500 rose 23.78 to 1,093.08. The yen, while little changed against the dollar, dropped versus other major currencies on improved risk sentiment. The euro rose to the 1.50 handle on stronger-than-expected German industrial production and improving EMU investor sentiment. Sterling gained for a sixth consecutive day. The Australian and Canadian dollars were supported by gains in risky asset prices. Canadian housing starts climbed to the highest level this year while Australian data were mixed.

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