USD and JPY strengthened on concern US bank losses will derail the global economic recovery, spurring investors to reduce holdings of higher-yielding assets.

  • US bank shares fell 3.3% collectively, the steepest decline among the S&P 500's 24 industries, after a number of banks were downgraded on concern loan losses will remain high.  Asian stocks extended a global decline and on speculation Bank of America will sell shares to pay back its government bailout, strengthening the Japanese yen against most of its major counterparts.
  • The greenback rose against the majority of the most-actively traded currencies.  The biggest advance was against the euro touching 1.4843, the strongest level in almost two months, on speculation its earlier drop to a 14-month low beyond 1.50 would be too hard to sustain.
  • Germany's Consumer Confidence Index fell for the first time in more than a year from 4.2 to 4.0 against expectation of an increase to 4.5.  The drop came on the back on mounting fear over higher energy costs and rising unemployment causing consumers to consider scaling-back on their purchases.
  • Crude oil for December delivery dropped as much as 3.1% to $77.95 a barrel on the New York Mercantile Exchange before recovering to above $78.50 a barrel.  Last week oil prices touched $82 a barrel, the highest level in a year.  Canada's dollar depreciated to the lowest level in almost three weeks as Bank of Canada Governor reiterated concern the currency has grown too strong and crude oil and stocks tumbled.

Currency to watch out for: EURUSD & USDCAD

  • The EURUSD pivot point is at 1.4975 with a preference to enter into short positions at 1.4965
  • The USDCAD pivot point is at 1.0650 with a preference to enter into long positions above 1.0650

Today's calendar and market movers:

  • UK CBI Distributive Trades expected to rise to 5
  • US Case Shiller month on month expected to drop to 0.7%
  • US Consumer Confidence expected to remain unchanged at 53.1

Stocks:

  • Despite opening higher, stocks reversed on the back of renewed concerns that some banks may have problems repaying federal bailout funds.  US equities ended lower with the Dow closing at -1.1%, the S&P -1.2% and the NASDAQ -0.6%
  • As of 07:00 GMT the Nikkei is trading at -1.45% and the Hang Seng at -1.7%.