Oil price extended Friday's rally on escalated conflict in Gaza. The February contract rose to above $47/bbl in Asia morning with the next resistance at $50/bbl.

Israel resisted renewing the ceasefire that expired on Dec 19 and said it has to defeat the Hamas military despite international pressure. Yesterday, Israeli troops drove deeper in Gaza, from aerial campaign to ground operations. Investors worry that the conflict will spread to other parts of the Middle East, such as Saudi Arabia, Iran and Iraq and affect oil supply.

Equity markets in Asia continue to rise Monday amid speculation on uplifting government policies in the US. The MSCI Asia Pacific Index added 1.3%, the 8th straight daily gain, while Japan's Nikkei 225 stock average gained 2.4%. President-elect Obama urges the Congress to pass the tax cut which is around US$ 300B, 40% of the US$700B bailout package. The Japanese government will buy corporate bonds and stocks so as to save companies on the verge of bankruptcy.

Gold price trades narrowly around $870/oz. While increased tension in the Middle East boosted gold's appeal as safe haven as well as inflation hedge, rebound in the dollar against major currencies limits the precious metal's gain.The USD index continues to edge higher to around 81.7 Monday after finding support at 77.69 in mid-December. Technically, further strength to 84 level cannot be ruled out. Against the Euro and pound, the greenback also gained slightly.

Commodity currencies such as Aussie and Kiwi rose as crude oil and other commodity prices surged. Coal, iron ore, gold and oil account for 60% of Australia's revenue from export while milk and timber contribute 70% of New Zealand's export.