Stock prices fall ask credit woes continue. FOMC minutes set for release

U.S. Dollar Trading (USD) rebounded on Monday as drops in stock prices prevented traders from entering into risky carry trades, once again relieving the USD of its pressure against a number of high yielding currencies. Stock prices fell on Monday as Goldman Sachs Group Inc. sited a “sell'' evaluation on shares of Citigroup Inc., the largest U.S. bank. Earlier in the session the USD was able to gain against the Euro as China central bank Governor Zhou Xiaochuan said his country supported a strong dollar. In U.S. share markets the NASDAQ was down by - 43.86 points (-1.66%) whilst the Dow Jones also fell by – 218.35 (-2.66%). Crude oil firmed on Monday, which rose above US$95.00 before ending the day up by US$0.81 a barrel to US$94.65. Looking ahead, plenty of attention to be placed on the FOMC minutes of the Oct 31 meeting, in which markets awaits any indication of future monetary policy announcements. Also out of the U.S. on Tuesday, housing starts for the month is expected to come in at 1150k for the month of October, short of the previous 1191k.  

The Euro (EUR) lost ground on the greenback although not as significant as other majors. The USD was revived in reaction to a drop in share prices causing carry trades to dwindle. Overall the EURUSD traded with a low of 1.4622 and a high of 1.4687 before ending the New York session at 1.4668. 

The Japanese Yen (JPY) was the biggest market mover on Monday as investors were prompted to reduce the carry trade exposure in light of recent credit woes. The Japanese Yen was able to gain more than 0.9% against the USD and the Euro throughout the day. Overall the USDJPY traded with a low of 109.75 and a high of 111.07 before closing the day at 109.85 in the New York session.  

The Sterling (GBP) came within reach of its lowest level in a month as reports showed that UK house prices had declined (-0.7%) in October fuelling expectations that the Central Bank may look to cut interest rates to rejuvenate the economy.  The GBP also traded at a 4 ½ year low versus the Euro at 71.55 pence. Overall the GBPUSD traded with a low of 2.0453 and a high of 2.0555 before closing the day at 2.0491 in the New York session. .

The Australian Dollar (AUD) failed to trade above key 90 cent levels during the Asian session, before a drop in stock prices caused the high yielding currency to be pressured. Overall the AUDUSD traded with a low of 0.8829 and a high of 0.8997 before ending the New York session at 0.8849.

Gold (XAU) eased further on Monday following significant profit taking from investors. XAU fell by US$9.00 an ounce to US$778.00
 
TECHNICAL COMMENTARY

Euro – 1.4670
Initial support at 1.4582 (Nov 16 low) followed by 1.4521 (Nov 13 low). Initial resistance is now located at 1.4726 (Nov 14 high) followed by 1.4753 (Nov 9 trend high).
 
Yen – 109.85
Initial support is located at 109.13 (Nov 12 low) followed by 108.99 (May 17, 2006 reaction low). Initial resistance is now at 111.76 (Nov 14 high) followed by 112.88 (Nov 8 high)
 
Pound – 2.0490
Initial support at 2.0354 (Nov 16 low) followed by 2.0243 (Oct 12 low). Initial resistance is now at 2.0567 (Nov 19 high) followed by 2.0618 (Nov 15 high)
 
Australian Dollar – 0.8825
Initial support a 0.8805 (Nov 20 low) followed by 0.8754 (Nov 13 low). Initial resistance is now at 0.8997 (Nov 19 high) followed by 0.9073 (Nov 14 high)
 
Gold – 777.20
Initial support at 775.40 (Nov 19 low) followed by 771.50 (Oct 19 low). Initial resistance is now at 818.30 (Nov 15 high) followed by 845.80 (Nov 7 trend high)