Forex outlook:
The yen dropped against the euro after finance ministers and central bankers from the Group of 20 industrialized nations this weekend made no comment on the decline in Japan's currency. The yen traded at 151.41 against the euro from 151.05 on Nov. 17. It was at 117.96 per dollar from 117.75. Investors are speculating Japan's currency may move between 116.50 and 119.50 per dollar this week. The Japanese currency also weakened after central bank Governor Toshihiko Fukui said Japan doesn't face an immediate inflation threat, reducing speculation BOJ will boost rates again this year. Investors are betting on the yen to fall to 118.50 per dollar today. Comments from ECB president Trichet suggest global rates may need to keep rising. The ECB has already signaled its intent to raise interest rates again in the euro region. The European central bank next meets Dec. 7. Trichet has used the word “vigilance” in the past to signal rate increases. Policy makers from the G-20 said over the weekend that central banks “will need” to raise rates to contain inflation.
“The ECB is going to continue to talk tough about inflation, and this is euro supportive,” Sharada Selvanathan, a currency strategist at BNP Paribas said. The euro, at $1.2835 per dollar, should rise above $1.29 in the next few weeks, she said.
German producer prices index released this morning rose to 0.3 percent higher than the 0.1 percent decline forecast, which brought positive effect on the euro. Also today, investors are expecting Dallas Federal Reserve President Richard Fisher to speak about the German economic situation in Berlin Germany.
Gold: Gold futures fell 1.2 percent to $622.50 an ounce last week, and rebounded on Monday after jewellery makers started purchasing gold for the Christmas. The decrease surprised a majority of analysts and investors as they predicted a gain in gold. “We believe gold has some real potential to move higher before year end,” said Frederic Panizzutti, senior vice president in Geneva for MKS Finance.
Crude Oil: Crude oil fell as much as 1.1 percent to $58.30 a barrel from $58.97 on Friday after forecast of mild temperatures in the U.S. Northeast this week may reduce heating demand. Oil prices were pressed lower as the U.S. market is well supplied in terms of stockpiles as refinery maintenance reduces demand for crude oil. OPEC may cut output again next month if mild temperatures persist and stockpiles rise further, Qatar's energy minister Abdullah bin Hamad al-Attiyah said on Nov. 18. The group meets in Abuja, Nigeria on Dec. 14.
Pool position:
