The US dollar and the Japanese yen ease away from their rally ahead of a report from Germany forecast to show confidence rose to a three-year high.

  • Germany is Europe's largest economy and a manufacturing hub and therefore provides a good indicator on the global economy.
  • The EURUSD rallied almost 100 pips to 1.4133 at 05:00 GMT from yesterday's low 1.4045 as doubts eased about the economic recovery in the euro region.  The ZEW Center for European Economic Research is forecasted to post a rise of its index to 45 from 39.5 in July.  The report which aims to predict developments six months ahead may reach the highest reading since May 2006 if the number comes in as analysts are predicting.
  • Germany has already boosted confidence by growing it's GDP by 0.3% in the second quarter, emerging out of its recession sooner than forecasters had predicted.  The focus today will be on Germany's institutional investors and analysts as traders around the world wait to see if Germany will continue to encourage risk appetite.
  • Crude oil broke out of two days of losses on a weaker US dollar making commodities a good alternative investment.  Since Friday, oil collapsed about 5.3% as the global equity markets declines raised concerns of a slower economic growth.

Currency and Commodity to watch out for: EURUSD & Oil

  • The EURUSD pivot point is at 1.4160 with a preference to enter into short positions at 1.4150
  • Crude Oil pivot point is at 68.03 with a preference to enter into short positions below 68.03

Today's calendar and market movers:

  • UK CPI year on year expected to drop to 1.5%
  • German ZEW Economic Sentiment expected to rise to 45.0
  • US Building Permits expected to rise to 0.58 million

Stocks:

  • Wall Street suffered its worst loss in seven weeks with the three major indexes closing lower 2% to 2.8%.
  • As of 06:10 GMT the Nikkei is trading at 0.16% and the Hang Seng at -0.31%.  Also both European and US stock futures are slightly higher.