The Japanese yen rose against all of the 16 major currencies after China reported some disappointing news.

  • Chinese reports showed industrial output grew less than expected and also said that producer and consumer prices both dropped.
  • The Bank of Japan left the interest rate at 0.1% and said that it remains concerned about downside risks to economic activity and prices even as the economy shows strong signs of recovery.
  • The main event this week is the FOMC meeting, with the member's decision to be announced tomorrow.  Investor are waiting to see a shift from the negativity from Bernanke and his colleagues to a more upbeat view on the economy or at least a neutral stance.  Also many are looking for the Fed to explain an exit strategy.
  • Wall Street slides after a four-week rally that took the S&P to a 10-month high on Friday.  Losses in the dollar were tempered by speculation that upcoming US reports will provide more evidence for a recovery.  The Canadian dollar collapsed on weaker equity markets and falling oil prices for the third straight day.

Currency to watch out for: EURUSD & GBPUSD

  • The EURUSD pivot point is at 1.4210 with a preference to enter into short positions at 1.4200
  • The GBPUSD pivot point is at 1.6580 with a preference to enter into short positions at 1.6570

Today's calendar and market movers:

  • Canada Housing Starts expected rise slightly to 143,000
  • US Wholesale Inventories month on month expected to drop to -1.0%

Stocks:

  • US stocks closed lower on Monday with the Dow, S&P and NASDAQ down between 0.3% and 0.4%
  • As of 06:30 GMT the Nikkei is at 0.6% and the Hang Seng 0.41%