Headlines: Dollar rose on speculation China will diversify reserves on a slower pace
Main news:
- Key economic data ahead today
- Crude oil fell as doubts on OPEC production cut
Forex outlook:
he dollar rose the most in more than a week against the euro and yen as investors bet comments by the chief of China's central bank do not indicate a faster pace of U.S. currency sales in the near future. The yen traded at 118.23 against the dollar on Monday compared with 117.62 late on Nov. 10. The U.S. currency rose against the euro to $1.2804, from $1.2841. Speculation the Federal Reserve may hold interest rates steady for longer than traders anticipated also supported the dollar. Fed Bank of Dallas President Richard Fisher said on Monday during a speech in San Antonio that the U.S. economy is expanding “forcefully”, while he declined to comment on monetary policy.
Sterling fell the most in three weeks against the dollar after a report showed producer output prices rose 1.7 percent from a year earlier, the slowest since March 2004, against a gain of 1.9 percent forecast. The pound fell as low as $1.9004 from pre-data levels above 1.9100. Investors are awaiting consumer price figures today ahead of the Bank of England’s quarterly inflation report later in the week for clues on whether the BOE, which raised interest rates to 5 percent last week, would hike them again. As well as German inflation and investor confidence data are due to be released today along with U.S. retail sales data for October.
Gold: Gold futures dropped 0.7 percent to $625.80 an ounce as a rise in the dollar and weaker oil prices encouraged investors to sell. “There's weakness in the base metals and oil,” said Carlos Perez-Santalla, gold trader and president of Hudson River Futures. “Commodities have been weak across the board. That's why gold is under pressure.” Despite the price correction, the market was poised for volatility as the year draws to a close, adding that sentiment remained bullish.
Crude Oil: Crude oil fell 1.7 percent, to $58.58 a barrel, the lowest in more than a week as warm weather in the eastern U.S. reduced heating fuel consumption and investors continued to doubt OPEC’s ability to deliver on its agreed crude oil production cut. OPEC agreed last month to cut production by 1.2 million barrels per day from 1 Nov. But the U.S. government said last week it was expecting OPEC to fall wekk short of that cut, reducing output by only 745,000 bpd this month as Iran and Venezuela keep their production steady.
