Forex outlook:
The dollar fell for a fifth day to $1.3120 against the euro, the longest losing streak in seven months, on speculation the Federal Reserve will reduce interest rates in the first quarter. The U.S. currency slid to $1.3094 last Friday, a five month low. The dollar also traded at 115.93 yen from 115.90, after touching 115.40, the weakest since Aug. The U.S. currency dropped to the weakest since March 2005 against the euro before Fed Chairman Bernanke speaks tomorrow on the U.S. economy. Investors raised bets the Fed will cut interest rates as reports this week may show a worsening housing market. U.S. existing home sales report tomorrow will show purchases of previously owned homes dropped 0.5 percent last month to an annual rate of 6.15 million, the weakest since January 2004, according to forecast. The yen dropped to a record low versus the euro at 152.43 as investors favored higher-yielding European assets, as investors are betting the ECB will lift its 3.25 percent rate twice more by June and the BOJ will boost key borrowing costs three times to 1 percent by the end of next year, still the lowest rates among the world's major economies. As some economists suggested, the dollar will fall to $1.35 per euro and 112 yen in the next six weeks.
The pound climbed as much as 0.6 percent to $1.9435 per dollar, the highest in almost two years, on speculation the Bank of England will raise interest rates to curb inflation. BOE raised it benchmark rate to a five-year high of 5 percent on 9 Nov and signaled accelerating economic growth risks driving up inflation.
Investors are keeping an eye on Japan today, as BOJ governor Fukui will speak at a news conference before the retail sales report for October, which likely to fell 0.1 percent from the same month last year according to forecast.
Gold: Gold rose for the seventh straight day, as the dollar extended its loss against the euro and yen from last week, enhancing the precious metal's appeal as an alternative investment. Gold futures rose as much as 0.6 percent to $642.10 an ounce. Investors are still favoring buying gold before it reaches $645-$646 resistance, which failed to break in early August this year.
Crude Oil: Crude oil rose above $60 a barrel on signs OPEC may cut production for the second time in two months if November’s 1.2 million barrel-a-day cut fails to stabilize the oil prices. Crude oil prices also pushed by the losing dollar as investors bet on interest rates cut. Crude oil prices are expected to rise this week on speculation cooler temperatures will increase demand for heating fuel.
Pool position:
