Broker's Notes: Euro pares gains against the UK pound

 Euro

The euro pared gains against the pound on Monday after some macro funds sold the single currency as a relief rally seemed to have run its course and uncertainty over an Irish bailout package returned to dog investors. The Irish opposition finance spokesman, Michael Noonan, said there were differences between the European Union and the International Monetary Fund, highlighting the uncertainties still hanging over the Irish bailout deal. But Irish Finance Minister Brian Lenihan denied there was any divergence of views. Sterling was higher on the dollar drawing some support from news of the Ireland aid package, but it ran into some selling by Asian central banks.

Indian rupee

The Indian rupee rose on Monday supported by higher local stocks and firmer Asian currencies, but the gains should be limited as foreign equity investors take profits with the year-end approaching. Demand for dollars is expected to pick up ahead of the end of the month when importers make payments. One-month offshore non-deliverable forward contracts were quoted at 45.55, weaker than the onshore spot rate, suggesting a bearish near-term outlook. The main stock index was up 0.4 per cent after rising as much as 1 per cent in early trade taking cues from firmer Asian markets. Prime Minister Manmohan Singh, weakened by a corruption scandal involving his sacked telecoms minister, told the Supreme Court on Saturday he had done nothing wrong and had followed correct procedures.

Oil

Crude futures rose above $82 a barrel on Monday, helped by a weaker dollar against the euro after the EU and IMF agreed to help bail out Ireland with loans to tackle the country's banking and budget crisis. Oil still remains well below a 25-month high of $88.63 hit on Nov. 11, but recovered after marking a four-week low of $80.06 on Wednesday amid concerns about the euro zone's fiscal health. Late on Friday, the U.S. government reported that money managers cut net long crude oil positions on the NYMEX in the week to November 16, from record high levels the previous period. Money managers slightly reduced their net long positions in heating oil while raising them for gasoline, according to the report from the U.S. Commodity Futures Trading Commission.

Gold

Gold rallied for a third day on Monday as the euro benefitted from Ireland's rescue deal at the expense of the U.S. dollar, which broadly boosted investor appetite for commodities. European and IMF officials will begin working on the details of a three-year bailout package for Ireland - expected to total 80-90 billion euros ($109.4-$123.1 billion) - to tackle its banking and budget crisis. The move, which officials hope will help stabilise financial markets, boosted the euro, along with European equities. While such reassurances undercut some of gold's safe-haven appeal, the subsequent decline of the dollar fed demand for the metal. Holdings of gold in the world's largest exchange-traded fund rose for the first time in two weeks indicating investors are delving back into precious metals.

Source: Richcomm Global Services DMCC www.richcommglobal.com