• The dollar plunged on Monday after G-20 finance ministers did not address the dollar slide and agreed to maintain the stimulus programs for the foreseeable future. UK Chancellor of the Exchequer Alistair Darling said the G-20 had decided to keep interest rates low and maintain record budget deficits until economic recoveries take hold. Separately, the International Monetary Fund said the US currency may still be overvalued. Dollar carry trades returned while global stocks and commodities surged. Gold rose above $1,100 an ounce, a record high. Dow Jones 30 made a new yearly high. The S&P 500 rose 23.78 to 1,093.08. The yen, while little changed against the dollar, dropped versus other major currencies on improved risk sentiment. The euro rose to the 1.50 handle on stronger-than-expected German industrial production and improving EMU investor sentiment. Sterling gained for a sixth consecutive day. The Australian and Canadian dollars were supported by gains in risky asset prices. Canadian housing starts climbed to the highest level this year while Australian data were mixed.
• The dollar index fell to 74.93, the lowest level since August 2008, before recovering modestly to close just above the 75-area support. If this support is broken, the dollar index may fall to the 71-area support that is the low set last year. There is resistance in the 77-78 area.

Financial and Economic News and Comments

US & Canada

• Canada's seasonally adjusted housing starts rose 5.4% m/m in October to an annualized 157,300 rate, the highest level this year, from a downwardly revised 149,300 pace in September, Canada Mortgage and Housing Corporation reported. October housing starts fell 24.9% y/y.

Europe

• The Sentix eurozone investor sentiment index increased more than expected to -7.0 in November from -12.6 in October, indicating eurozone investor confidence climbed for a fourth consecutive month and reached its highest level since June 2008, data released by Sentix showed. The current conditions index grew to -24.3 in November from -29.3 in October. The expectations index rose to 12.0, its highest level since June 2007, from October's 5.75.

• Germany's seasonally adjusted exports increased a more-than-expected 3.8% m/m to €68.3 billion ($102.4 billion) in September after a downwardly revised 2.8% m/m decline in August, while seasonally adjusted imports rose a more-than-expected 5.8% m/m to €58.4 billion, a fourth consecutive month-on-month rise, following a downwardly revised 0.5% m/m August increase, figures for the Federal Statistical Office showed. Exports dropped 18.8% y/y nsa in September; imports fell 16.3% y/y nsa. The trade surplus widened to €10.6 billion in September from €8.1 billion in August. The current-account surplus rose to €9.4 billion from a downwardly revised €4.4 billion.
• Germany's seasonally adjusted industrial production rose for a second month in September, rising a morethan- expected 2.7% m/m, after an upwardly revised 1.8% m/m increase in August, according to IP data from the Federal Ministry of Economics and Technology. September IP decreased 12.9% y/y nsa wda, following a revised 15.8% y/y August drop.

Asia-Pacific

• Australia's home-loan approvals rose a more-than-expected 5.1% m/m in September, the largest gain in 6 months, to 65,505, after a revised 1.9% m/m decrease in August, according to figures from the Australian Bureau of Statistics. The total value of loans grew 4.8% m/m to A$23.847 billion ($22.13 billion) in September. The value of lending for owner occupied housing climbed 6.7% m/m to A$17.596 billion while the value of lending for investment declined 0.1% m/m to A$6.251 billion.

FX Strategy Update