19.11.2008 13:36

Asian session:

The yen rose against the dollar as speculation U.S. lawmakers will fail to agree on a bailout for automakers damped demand for carry trades, buying higher- yielding overseas assets with funds borrowed in Japan.
The currency also gained against the Australian dollar and the British pound as a deepening global economic slump spurred Asian stock losses. A $700 billion U.S. financial stability package isn't intended to prevent General Motors Corp., Ford Motor Co. and Chrysler LLC from collapsing, Treasury Secretary Henry Paulson said in a House hearing yesterday.
The U.S. economy would suffer a ``catastrophic collapse'' if domestic carmakers fail, GM Chief Executive Rick Wagoner said yesterday. Three million jobs would be lost within the first year and government tax losses would total $156 billion over three years, Wagoner told a Senate panel.
The dollar may extend declines before government reports today that economists say will show the housing recession at the heart of the U.S. economic downturn is deepening, bolstering the case for the Federal Reserve to cut interest rates.
The ICE's Dollar Index, a gauge of the greenback against the currencies of six major trading partners, snapped two days of gains as futures traders raised bets the Fed will lower borrowing costs in coming months. A U.S. report yesterday showed confidence among homebuilders dropped in November to the lowest level since record-keeping began in 1985.
Housing starts in the U.S. fell to a 780,000 annual pace in October, the lowest since records began in 1959, according to a Bloomberg News survey of economists. Building permits dropped to a 774,000 pace last month, the lowest since November 1981. The Commerce Department releases both reports at 13:30 GMT in Washington.
Futures on the Chicago Board of Trade show a 9 percent chance the Fed will reduce its 1 percent target rate for overnight bank loans to 0.25 percent by its Jan. 28 meeting, up from zero odds a day earlier.
The dollar may also decline as economists say data today will show U.S. consumer prices fell 0.8 percent in October, the most since 1949, after being unchanged the previous month. The Fed will also today release minutes of its Oct. 29 meeting where policy makers cut rates by half a percentage point.

EUR/USD has been limited by frameworks $1,2600-$ 1,2650.

GBP/USD remained within the limits of $1,4900-$ 1,5000.

USD/JPY having established minima in the field of Y96,30, the pair has receded in area Y96,60.

The UK leads the data releases for the European morning. At 0930GMT, the Bank of England publishes the minutes of the November 5-6 Monetary Policy Committee meeting.
US data starts at 1200GMT with the MBA Mortgage Application Index, though the main releases are at 1330GMT with the CPI, housing starts and building permits for October. The CPI is expected to fall 0.8% in October, reflecting an expected decline in energy prices, particularly gasoline. Core CPI is expected to rise 0.1%. Housing starts are expected to slow to a 780,000 seasonally adjusted annual rate, as builders continue to slash new home output to match falling demand. At Late US data sees the 1900GMT release of the Federal Reserve minutes from the Oct 28-29 FOMC meeting, in Washington.