The Japanese yen traded close to a seven-week high against the US dollar on speculation that asset prices are overblown
- Over in Asia Pacific, the Australian dollar eased back from close to its highest level against the US dollar following the RBA's decision to maintain interest rates at a half-century low of 3%.Â The RBA also stated that monetary policy is appropriate for current economic environment.
- Risk aversion is sneaking in as investors round the globe are concerned over the sustainability of the economic rebound.Â The upside in the Japanese yen was limited after a Chinese government report showed the nation's manufacturing expanded in August at the fastest pace in 16 months, easing concerns that China's economy recovery may tail off.
- Crude oil prices collapsed 4% on commodity losses to levels below $70 a barrel.Â Optimism about the pace of economic recovery and a potential rebound in global energy prices was dented on reports of a possible curb in Chinese bank lending.
- US consumer sentiment dips to a four-month low of 65.7 from 66 in July prompted by concerns of rising unemployment and bleak personal finances according to the University of Michigan's Index on Consumers Confidence.
- Finally in the UK, house prices gained for the first time in two years in August as a lack of resale homes helped boost prices in and around London.Â The recession has pushed house prices down 12% since the market's peak in September 2007.
Currency to watch out for: GBPUSD & EURUSD
- The GBPUSD pivot point is at 1.6350 with a preference to enter into short positions at 1.6340
- The EURUSD pivot point is at 1.4405 with a preference to enter into short positions at 1.4395
Today's calendar and market movers:
- UK Manufacturing PMI expected to rise to 51.5
- EU Unemployment Rate expected to rise to 9.5%
- US ISM Manufacturing PMI expected to rise to 50.6
- US equities fell on Monday with the Dow off by 0.5%, the S&P off 0.8% and the NASDAQ lower 1%.
- As of 06:05 GMT the Nikkei is at 0.5% and the Hang Seng at 0.6%