USD: The dollar declined against the yen on Monday, but held steady versus the Euro as a global rout in stock markets and higher oil prices raised concern about the health of the U.S. economy and left investors wary of risky trades. Investors grew particularly cautious after Goldman Sachs added U.S. banking giant Citigroup to its "sell" list, saying the bank would likely face more mortgage-related losses next year. With few major economic events and data releases this week, investor’s awaited data on U.S. home construction starts due out later today. Housing starts are forecast to show an annual pace of 1.170 million units for October, down from September and reflecting continued weakness in the U.S. housing market as tighter lending standards and lower home prices keep activity at bay. In addition, the Federal Reserve will release the minutes of its October policy meeting when it cut rates by 25 basis points to 4.5 percent, having slashed them by 50 basis points in September. Many in the market are expecting more Fed rate cuts, although recent comments from several policymakers have hinted that the central bank sees no need for further easing yet.
JPY: The yen held gains against the dollar and Euro on Tuesday and climbed against high yielder’s after more trouble in the U.S. subprime mortgage and credit markets kept investors cautious about risky carry trades. A 1.9 percent fall in the Nikkei stocks average to a 16-month low, after U.S. equities hit their weakest levels in three months on Monday, also supported the yen as investors used stock movements as a barometer of risk appetite.
AUD: The Australian dollar stayed on the back foot, holding just barely above 88 U.S. cents, after a slide in stocks prompted investors to shun higher-yielding currencies in favour of less risky assets.
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