The greenback declined broadly on Monday after the Group of 20 weekend meeting voiced little concern on the dollar's weakness and agreed to maintain economic stimulus until a recovery was assured, encouraging investors to buy higher-yielding assets. The dollar index, which tracks the greenback against a basket of currencies, fell to its lowest level since August 2008 in New York morning at 74.935. DJI hit a fresh 2009 high and closed up 203 points or 2.03% at 10,226.
European currencies rallied versus the greenback on Monday amid broad-based dollar weakness after the G-20 meeting. Earlier in the day, the single currency penetrated last week's 1.4918 high and continued to trade with a firm bias after German trade surplus in September came out at 9.4 billion euros versus 4.4 billion euros in August. German industrial production rose by 2.7% in September (forecast was for a 1.0% rise) versus the upwardly-revised 1.8% in August. Euro later surged to as high as 1.5021 in New York morning before stabilising with no major U.S. data scheduled for release on Monday. Cross buying in euro against sterling also supported the single currency as eur/gbp rebounded from 0.8896 to 0.8977. Usd/chf dropped from 1.0172 to 1.0055 while gbp/usd rose from 1.6618 to 1.6844, the highest since August, before retreating on cross trading in New York.
The surge in commodity prices (oil prices gained $2 to settle at $79.43 a barrel and spot gold price hit another fresh record high of 1110.10/oz) and the tumble in U.S. dollar sent Australian dollar, New Zealand dollar and Canadian dollar (known as commodity currencies) higher. Aud/usd strengthened from 0.9195 to 0.9309, nzd/usd rallied from 0.7265 to 0.7437 while usd/cad slumped from 1.0779 to 1.0542.
Data to be released on Tuesday include Japan current account, Australia NAB business confidence, Japan economic watch, machine tools orders, German CPI, WPI, U.K. BRC retail sales, RICS house price, trade, balance, DCLG house price, German and eurozone Zew survey.