Forex: Monday’s review

The euro rose in early U.S. session amid falling yields of government bonds from the Italian medium term and there were rumors that the IMF is preparing a preemptive bailout for Italy in the amount of 400-600 million euros. But then quickly followed by denials,including an official from the IMF. Negative background outweighed the sentiment and the euro fell. Thus, Moody's warned that the rapid development of the sovereign and banking crisis threatening the region's rankings of European government bonds. The Organization for Economic Cooperation and Development (OECD) said that France needed to take more stringent economic measures in order to achieve the goal of a budget deficit for 2012, as GDP growth may not reach projected levels due to the recession.

Investors are awaiting meeting of Ministers of the euro area, which may adopt the rules of the European Foundation for financial stability. Their approval would allow the fund to $ 440 billion euros to attract funds from investors.

The pound weakened versus higher- yielding peers after data showed U.K. house prices dropped last month and retail sales fell, and as the British Chambers of Commerce cut its economic-growth forecasts. Chancellor of the Exchequer George Osborne presents updated economic and fiscal forecasts to Parliament tomorrow amid speculation government growth estimates will be cut and budget shortfalls will be greater than predicted. The central bank said last week that the threat of the euro-area debt crisis on the U.K. economy has increased. Minutes of the central bank’s Nov. 9-10 meeting released on Nov. 23 showed some policy makers said an increase in stimulus may be needed to support the economy. The minutes also revealed the nine-member Monetary Policy Committee voted unanimously to keep its key interest rate at a record low of 0.5 percent.

EUR/USD: yesterday the pair advanced.

GBP/USD: yesterday the pair grew.

USD/JPY: yesterday the pair advanced.                                

On Tuesday EMU data includes the 0900GMT release of both the business climate indicator and the economic sentiment survey for November. UK data starts at 0930GMT with the BOE Lending to Individuals, M4, Bankstats and Effective Rates data, while also in the UK today, the UK OBR forecast and Autumn statement from the Chancellor George Osborne are due with the UK Autumn Budget Statement at 1230GMT.US data starts at 1245GMT with the weekly ICSC-Goldman Store Sales data, which is followed at 1355GMT by the weekly Redbook Average and then at 1400GMT by the S&P/Case-Shiller Home Price Index. At 1500GMT, the FHFA Home Price Index is due at the same time as the index of consumer confidence is forecast to rebound to a reading of 44.4 in November after plunging in October to a reading of 39.8. The Michigan Sentiment index rose solidly in November. This is followed at 1530GMT by the Dallas Fed Services Outlook Survey. At 1630GMT, Fed Vice Chair Janet Yellen makes remarks on the global recovery at the San Francisco Fed's Asia Economic Policy Conference in San Francisco. At 0100GMT Wednesday (8pm Eastern), Minneapolis Fed President Narayana Kocherlakota delivers a speech on monetary policy to the Stanford Institute for Economic Policy Research in Stanford.