Gold resumes uptrend after correction and the benchmark contract surges to as high as 1200.5. After UAE central bank showed support, investors' nerve steadies and realizes the real value of the yellow metal. Apart from ongoing demand from global central bankers, gold usually shines during economic or sovereign instability. As investors seek safe investment, gold should be a good choice besides USD.

BOJ's extension of the emergency credit plan weighed on Japanese yen and lifted USD, a 3rd rate hike by the RBA boosted Aussie and offset the dollar's gain. Together with strength in other higher-yield currencies, USD moves lower.

Facing pressure from Prime Minister Yukio Hatoyama's administration, the BOJ held an emergency meeting today and decided to provide commercial banks three-month loans of 10 trillion yen at interest of 0.1%. Eligible collateral will include Japanese government bonds, commercial paper and corporate bonds. However, many believed the move is not sufficient as the central bank maintained its monthly purchases of government bonds at 1.8 trillion yen, contrary to market expectation of an increase in buying. The Japanese government declared the country has entered deflation on November 20 for the first time in 3 years after core CPI contracted -2.2% yoy in October.

In contrast, the RBA increased the cash rate by 25 bps to 3.75%, the third month this year. The central bank depicted a more optimistic picture regarding economic outlook although maintaining the view that inflation will moderate further. According to the post-meeting statement, 'the downturn [in Australia] was relatively mild, and measures of confidence and business conditions suggest that the economy is in a gradual recovery. The effects of the early stages of the fiscal stimulus on consumer demand are fading, but public infrastructure spending is starting to provide more impetus to demand. Prospects for ongoing expansion of private demand, including business investment, have been strengthening. There have been some early signs of an improvement in labor market conditions. The rate of unemployment is now likely to peak at a considerably lower level than earlier expected'. The RBA stated that it has made 'material adjustment' on monetary policy in response to economic improvement. However, it's too early to speculate the central bank's next move as the next meeting will be held on February 2, 2010.

Crude oil changes little after gaining +1.6% Monday. Other than strong Chicago PMI which surprisingly rose to 56.1 (consensus: 53, October: 54.2) in November, drivers for crude's rally yesterday , such as Iranian tension, seizure of British yacht by Iran and Somali capture of a Greek oil tanker, likely had temporary rather than long-lasting impact on oil price. Market's focus is on EIA's inventory report Wednesday while the industry-sponsored API estimates to be released after US close should provide guidance on actual readings. Current market forecast on crude inventory (in the week ended November 27) is a draw of -0.85 mmb as refinery runs increased and imported shrank.

Economic data released so far today are supportive. In China, the government reported that manufacturing PMI stayed at 55.2, the highest in 18 months, in November. Similar gauge complied by HSBC Holdings increased to 55.7 from 55.4 in October, suggesting further expansion in China's manufacturing sector.

In Europe, UK's nationwide house prices rose +0.5% mom in November after contracting -0.2% a month ago. On annual basis, the reading surged +2.7%, compared with market expectation of +2.4%. In Switzerland, GDP grew +0.3% qoq in 3Q09, technically bringing the nation out of recession. Employment in the Eurozone showed signs of stabilization in November. In Germany, the number of unemployed fell -7K to 3.42M and the jobless rate slid to 8.1% in November from 8.2% a month ago. Unemployment rate in the Eurozone steadied at 9.8% during the month.

Events to watch in US session are ISM manufacturing (consensus: 55, October: 55.7), pending home sales (consensus: -0.5%, October: +6.1%) and construction spending (consensus: -0.5%, September: +0.8%).