Fundamental Outlook at 1500 GMT (EST + 0500)

€
The euro moved higher vis-à-vis the U.S. dollar yesterday as the single currency tested offers around the US$1.3165 level and was supported around the $1.3085 level. The market gapped about 65 pips higher at the Australasian open yesterday following Friday’s move that pushed the common currency to its highest level since April 2005. French finance minister Breton said he will “of course” discuss the euro’s strength, adding “the recent depreciation (of the dollar) requires our great collective vigilance.” Many U.S. and European economic data will be released this week including U.S. October personal consumption expenditures data on Thursday. Federal Reserve Chairman Bernanke will speak about the economy tomorrow and traders will be particularly interested in what he has to say about the U.S. housing market. Additionally, it will be interesting to see if he discusses the U.S. dollar’s recent depreciation. Euro bids are cited around the US$ 1.3045 level.

₤
The British pound appreciated sharply vis-à-vis the U.S. dollar yesterday as cable tested offers around the US$ 1.9455 level and was supported around the $ 1.9305 level. Cable gapped higher at the Australian open by about 135 pips, a continuation of last week’s significant move that propelled the pair to its highest level since December 2004. BBA data released today saw October mortgage approvals rise to 74,997, their highest level since June. Also, Hometrack reported house prices accelerated in November. Bank of England Monetary Policy Committee member Besley spoke today and said high levels of personal debt are not yet a major concern of policymakers. Cable bids are cited around the US$ 1.9310/ 1.9220 levels. The euro came off vis-à-vis the British pound as the single currency tested bids around the ₤0.6760 level and was capped around the ₤0.6785 level.