The USD declines after a short rally as global optimism increases risk appetite.

  • EURUSD hit fresh 14-month high at 1.5062 as an advance in Asian stocks and signs the global economy is recovering reduced demand for the greenback as a safe haven.  The USD fell against most of its major counterparts ahead of reports forecasted to show confidence among US and French consumers rose.  The yen and euro gained after an official Chinese paper said the nation should boost reserves in the currencies.
  • The GBPUSD fell over 400 pips from Friday's high of 1.6692 after the Office for National Statistics announced that the economy contracted another 0.4% between July and September.  The latest result marks the sixth straight quarter with negative growth for the U.K. bringing the total decline in GDP to 6% since the beginning of the recession.
  • The Bank of England has to date slashed lending rates to record lows and entered into a program of quantitative easing, committing £175 billion to the spending plan.  The question now is, how will the Bank of England respond from here?  Most of the QE funds have already been allocated to help the economy recover; however, the economy continues to shrink.  Many for this reason believe the government will have to borrow more money to continue the spending program.
  • Gold and oil fell in the Asian session as previous gains in the dollar on the back of weaker US equities dimmed the appeal of the commodities.  Earlier the greenback gained near a one-month high against the yen on speculation the Federal Reserve will increase interest rates sooner than economists forecast.

Currency to watch out for: EURUSD & GBPUSD

  • The EURUSD pivot point is at 1.4965 with a preference to enter into long positions at 1.4975.
  • The GBPUSD pivot point is at 1.6240 with a preference to enter into long positions at 1.6250.

Today's calendar and market movers:

  • EU German Consumer Climate expected to rise to 4.5

Stocks:

  • US equities closed negative on Friday with the Dow slipping below the 10,000 mark.  The Dow ended with -1.08%, the S&P -1.22% and the NASDAQ -0.54%. 
  • As of 07:00 GMT the Nikkei is at 0.77% and the Hang Seng at 1.71%.