The US dollar rose to a one-month high against a basket of currencies this morning as concerns about the global banking sector and weaker equity markets prompted safe-haven flows into the U.S.  Look for the dollar to remain sidelined ahead of the Federal Reserve's two-day policy-setting meeting announcement on Wednesday, as well as, jobs data due out on Friday.  The Fed. is expected to keep its benchmark interest rate unchanged near zero, but investors will focus on the future interest rate outlook and accompanying statement.  Analysts will be looking for a change in the Fed's current language which states that they intend to keep rates low for an "extended period."

The euro weakened against the USD as safe haven flows back to the greenback dominated.  In other news, European shares fell after the EU Commission released results of stress tests in the banking sector, which stated losses could amount to 400 billion euros ($585.2 billion) in 2009-2010.  Analysts will look towards Thursday's European Central Bank announcement where it is expected that rates will remain unchanged at 0.5 percent.

Sterling fell to a one-week low against the dollar after the UK Treasury raised concerns about the financial sector with the government announcing they will raise its stake in Royal Bank of Scotland.  Analysts will look towards the Bank of England's policy decision on Thursday where it is expected that they will increase their 175 billion pound asset-purchasing plan by 25 billion pounds.      

The Japanese yen weakened above .90 yen per dollar after initially strengthening overnight.  With the Bank of Japan keeping interest rates unchanged at 0.1 percent last week, look for the yen to remain supported as safe haven flows dominate in the short term.

The Canadian dollar remained slightly weaker against its U.S counterpart as demand for risk appetite dwindled.  Look for the weakness in the loonie to remain short lived as analysts look towards Friday's employment figures coupled with a rise in commodity prices.  

The Australian dollar fell below the psychological key level of .90 cents today after the Reserve Bank of Australia raised interest rates by 25 basis points, but indicated that a December hike is less likely.  Most importantly though was a change in the accompanying tone which indicated that the Reserve Bank of Australia is not inclined to lift rates by 50 basis points in December.  Look for the weakness to be short lived with strong iron ore exports to China having some analysts calling for parity with the U.S. dollar.

 The New Zealand dollar did not follow its Aussie counterpart and pushed higher as investors showed slightly more appetite for the currency.  The kiwi was unaffected by local data showing the annual growth in wages reached an eight year low in the third-quarter, while other indicators pointed to a soft labor market.  Analysts will look towards Thursday's employment indicator which is expected to show the jobless rate rising to 6.4 percent from 6 percent.

Indicative rates:

10-Year Treasury Note Yield:  3.460%

Dow Jones Industrial Average:  9,727.01 -61.67