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Forex outlook:
The dollar traded near a three-week low against the Euro on speculation a report will show U.S. home sales fell to the weakest in almost four years. The dollar is trading around the levels of 1.3460 against the Euro, around the levels of 123.87 against the Yen and around the levels of 1.9995 against the sterling.
The US. Currency was also close to trading above $2 per British pound for the first time since May 2, as traders increased bets on a Federal Reserve interest rate cut. The yield premium on U.S. two-year Treasuries over similar-maturity German debt narrowed to a 2 1/2-year low. ``The dollar's yield advantage has waned,'' said Sue Trinh, a foreign-exchange strategist at RBC Capital Markets in Sydney. ``The market is vulnerable to weaker housing data and that will weigh on the currency.''
Interest-rate futures today showed 41 percent odds the Fed will lower borrowing costs from 5.25 percent in December, up from a 32 percent chance June 22. The European Central Bank on June 6 raised its benchmark rate to a six-year high of 4 percent, boosting the Euro 0.4 percent over the past week. ``The dollar clearly remains vulnerable to a sudden loss of private-sector confidence,'' the Basel, Switzerland-based BIS said. ``The reliability of public-sector inflows has also become more uncertain.''
Today's report from the National Association of Realtors may show sales of previously owned homes fell to an annual rate of 5.97 million in May from 5.99 million a month earlier, according a Bloomberg News survey. The dollar has dropped 0.7 percent versus the Euro since June 18 when U.S. homebuilder confidence declined in June to the lowest since February 1991.
Gold held steady on Monday after rising more than $2 an ounce the previous session, while a weaker yen lent support to yen-based futures prices in Tokyo, with the most active platinum contract hitting a record high. "A weakening yen has been driving the Tokyo market higher," said Hitoshi Inagawa, senior manager at Yutaka Shoji Co. Ltd. "The market's prospects depend on the currency market. The prices of cash platinum or gold don't seem to have a clear direction," he said, adding that gold has a firm support at $640. Gold future contract is trading around the levels of 655.50$ per contract,
Oil prices fell by more than half a dollar to below $71 a barrel on Monday as Nigerian unions ended a strike that had threatened to disrupt oil exports. At the weekend, unions in Africa's top oil producer called off their strike after the government agreed to freeze fuel prices for a year. The general strike had halted most economic activity but did not affect oil exports, despite earlier threats from the union that they would remove key oil sector personnel. Western companies replaced key staff with management to keep oil flowing. Crude Oil future contract is trading around the levels of 68.600$ per barrel.
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