Japanese Yen Slips as U.S. Stocks Rally

Forex outlook:

The Japanese yen fell on Monday, reversing early gains, as U.S. stocks rallied at the
end of a volatile session, tempering fears of deteriorating credit markets .Concerns that turmoil in the U.S. sub prime mortgage sector have spilled over into the wider credit markets prompted traders to buy yen last week and earlier on Monday, closing
carry trades.

Carry trades involve borrowing in low-yielding currencies to buy higher-yielding assets, and the low-yielding yen has been the main beneficiary of a carry unwind.
"Trading in dollar-yen will be very much dictated by what happens with the stock markets this week," said Mark Meadows, a currency analyst at Tempus Consulting in Washington, D.C.

The yen earlier hit three-month highs of around 118.01 per dollar and 160.63 per Euro, according to Reuters data. But by afternoon in New York, the dollar traded
back up to 118.97 yen as stock indexes rallied.

Gains in U.S. stocks, though, had little impact on the euro. The European currency was up 0.5 percent against the dollar at $1.3694, while sterling was little changed at
$2.0246

Gold: rebounded from a two-week low in New York on Monday as the dollar weakened, but investors were nervous about taking new positions following recent losses in bullion and global equities markets. Traders said weaker share prices had forced investors to lighten positions in risky assets, including commodities, until
the situation in stock markets stabilized. "The weakness in global stock markets on concerns of a credit crunch continues, and this is probably a negative factor for gold," Dresdner Kleinwort said in a research note. "Rising crude oil prices failed to provide support for gold last Friday, and might again be overruled by investors shunning risky assets and flying to the safe havens of government bonds."
Gold Aug contract was trading around the levels of 664.7$ an ounce on 21:35 (GMT)

Crude Oil:U.S. crude oil futures ended lower on Monday, but only after hitting a fresh 2007 intraday high above $77 a barrel before seesawing and bouncing off the day's low just above $76."It's going to be volatile trying to work higher," said Jim Ritterbusch, resident at Ritterbusch and Associates in Galena, Illinois.On New York Mercantile Exchange, September crude fell 19 cents, or 0.25 percent, to settle at $76.83 a barrel,
trading from $76.05 to $77.33. That intraday peak was the highest since Aug. 9, when prices reached $77.40. 

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