09:30 UK BoE meeting minutes (05-06.11)The yen rose against the dollar as speculation U.S. lawmakers will fail to agree on a bailout for automakers cut demand for higher-yielding assets bought with funds borrowed in Japan.
The currency also gained against the Australian dollar and the British pound as a deepening global economic slump spurred stock losses in Asia and Europe. 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 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.
EUR/USD bargained within the limits of $1,25,90-$ 1,2660.