Volatility in markets as credit market woes grow. Japanese Yen key contributor.

[Gametrader]

U.S. Dollar Trading (USD)continued its previous session gain as ongoing credit related losses triggered further risk aversion within the market. Despite recent speculation on rate cuts out of the Federal Reserve materializing, majors were not able to sustain gains as high yielding carry trades were fled. In share markets the NASDAQ was down -43.81 points (-1.67%) whilst the Dow Jones -55.19 points (-0.42%). Crude oil was eased on profit taking by US$1.67 a barrel to US$94.65. Tuesday sees the release of Pending Home sales for the month of September, with expectations that plenty of attention to will emanate as the market tries to gain a clearer indication of the U.S housing slump.
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The Euro (EUR) continued to slide against the green back, as markets minimized their exposure in a volatile market. Overall the EURUSD traded with a low of 1.4526 and a high of 1.4679 before closing the day at 1.4548 in the New York session. Looking ahead, Industrial Production data will be made public, with forecasts at -0.2% (previous: 1.2) for the month of September.

· The Japanese Yen (JPY) was the main contributor to market volatility overnight as ongoing credit woes prompted traders to square positions against the JPY. Much of the moves ensured that high yielder’s were summoned to a significant sell off on the back of a drop in global stock prices. The Japanese Yen was therefore able to trade at a 1.5 year high against the USD. Overall the USDJPY traded with a low of 109.12 and a high of 110.78 before closing the day at 109.90 in the New York session. Looking ahead, the BoJ is expected to keep rates at a low 0.5% on Tuesday following the it’s two day meeting which began on Monday.

· The Sterling (GBP) eased from last weeks 26 year highs against the USD, and traded at a three month low versus the Japanese Yen, as speculators reduced their holdings in high yielding carry trade. The Sterling Pound also dropped the most in 3 ½ years versus the dollar after Morgan Stanley downgraded HSBC Holdings Plc on concern its provisions for U.S. loan defaults will rise. Overall the GBPUSD traded with a low of 2.0590 and a high of 2.0870 before closing the day at 2.0638 in the New York session.

· The Australian Dollar (AUD) was extremely volatile free falling as AUDJPY crosses were sold rapidly. Recognized as a highly attractive yield, the AUD suffered from risk aversion in a falling market. Overall the AUDUSD traded with a low of 0.8790 and a high of 0.9088 before closing the day at 0.8853 in the New York session.

· Gold (XAU)tumbled 3.2 percent, the most in 13 months, after the yen strengthened against major currencies, slowing the pace of investment in the precious metal and other commodities. Silver also plunged. XAU traded with a low of 798.30 and a high of 830.60( click here to read full market background)

[Gametrader]

U.S. Dollar Trading (USD)eased capping its two previous session of rallies against a basket of majors. Reports circulated that the U.A.E may look to offload the Dirham’s peg with the dollar according to one of the central bank officials. The U.S. dollar suffered as rebounding stock prices placed high yielder’s back in favor. In share markets the NASDAQ was up +89.52 (+3.46) whilst the Dow Jones also gained by +319.54 (2.46%). Crude oil fell by US$3.35 a barrel to US$91.30. Looking ahead, Retail Sales, and PPI appear to be key data releases today. Whilst Ben Bernanke is scheduled to speak today.

· The Euro (EUR) was able to gain 0.5% throughout the day following views that the UAE would cease its ties with the USD and was further buoyed by rebounding stock prices. Overall the EURUSD traded with a low of 1.4522 and a high of 1.4633 before closing the day at 1.4607 in session. GDP data out of the EZ will accompany talks scheduled by ECB president Trichet.

· The Japanese Yen (JPY) fell across the board as rebounding stock prices re-instated traders appetite for risk. Further more the BoJ kept rates unchanged with an 8 to 1 vote, with Mizuno the dissenter once again voting for a rate hike. In Accompanying statements Governor Toshihiko Fukui gave no indication of when the central bank would increase interest rates following Tuesday’s policy meeting. The decline was compounded following Prime Minister Yasuo Fukuda warnings about the pace of the Yen's advance. Overall the USDJPY traded with a low of 109.23 and a high of 110.52 before closing the day at 110.17 in session.

· The Sterling (GBP) was buoyed by strong CPI readings coming in well above expectations at 2.1% figure for the year, above the BoE target of 2%. The GBP was also buoyed by a return to carry trades favoring its role as a high yielding currency. Overall the GBPUSD traded with a low of 109.23 and a high of 110.52 before closing the day at 110.70 in session.

· The Australian Dollar (AUD) paired its previous session losses to trade higher as speculators returned to risky carry trades. Overall the AUDUSD traded with a low of 0.8754 and a high of 0.8949 before closing near day highs of 0.8964 in session.

· Gold (XAU)fell for a third straight session after a drop in energy costs reduced the appeal of the precious metal as a hedge against inflation. XAU traded with a low of 791.60 and a high of 808.70.

CLICK HERE TO READ Full MARKET BACKGROUND – 14 NOVEMBER 2007 (00:30GMT) On Java Integreted Currency Rate Table and Charts.