Overall: The dollar fell and S&P futures rose overnight after rumors surfaced that the U.S. government was preparing to swap its preferred stock for common Citigroup stock, something that could increase its ownership share up to 40%. Helping European shares was news that state-controlled RBS would split into two units including the “core” unit, and the second entity including non-essential activities. The bank’s investment unit is also set to shrink over the next period. But the move reversed early after Wall Street began trading, as U.S. investors remained concerned regarding the possibility of nationalization.


There was no economic data released from the U.S. on Monday.


The Euro (Eur/Usd) managed to break above the 20-day moving average into the Asian session, but could not hold on to its gains after the London open. The euro retraced almost half of the gains made earlier in the European session, falling 90 pips from the session’s high. The euro rose to a high of 1.2808 in the fist 30 minutes of trading in N.Y., but fell thereafter to trade flat for most of the session. Support in N.Y. was established just aboive the 1.2700 handle.


The Pound (Gbp/Usd) saw some strong gains in the Asian session, nearly 200 pips, but ran into the 50-day moving average and had to give some pips back during the European session. In the last period, the 50-day moving average acted as an important swing point. The pair fell steadily in N.Y. as the S&p headed towards the Nov. 21 low, finding support at 1.4465 before making a comeback to 1.4500.


The Aussie (Aud/Usd) broke briefly above the 20-day moving average in the early part of the European session. However, the pair lost ground as the session progressed, falling nearly 40 pips from its high. The 20-day moving average has acted as a resistance line for almost five days. The pair traded within a fairly tight range in N.Y., establishing a clear line of support on 0.6430.


The Cad (Usd/Cad) fell nearly 150 pips during the Asian session, but bounced back from the 20-day moving average. During the European session, the pair retraced almost 100 pips, producing a long downside wick. Oil fell about $1.50 in NYMEX trading but the cad traded within a tight, 30 pip range with resistance established at 1.2525.


In Canadian economic news, retail sales fell by the most since January 1991 in December as consumers reduced spending in all areas, particularly cars, building supplies and clothes. Sales fell by 5.4%, twice as bad as expected, after falling 2.7% in November. Sales ex-autos, the core number, fell 3.2%.


The Swissy (Usd/Chf) rose a few pips in the European session after it tried twice to break below Friday’s low. The swissy earlier broke below the 100-day moving average, but did not manage to hold, similar to what happened in the last day of trading. The pair fell in the first 30 minutes of Wall Street trading but rose thereafter, finding resistance on 1.1682 before retreating slightly.


The Yen (Usd/Yen) surged higher during the European trading hours. The pair gained 90 pips in a relatively small time-frame, helped by the gains seen in the S&P futures. Earlier during the Asian session, the yen tumbled 50 pips. The yen is in the middle of a longer-term daily upswing, and today finished retracing the last downside move between Jan. 06 and Jan. 21 to reach its highest price since Dec. 01.