Forex - EUR/USD extends gains after trade data

The euro extended gains against the dollar on Monday after upbeat euro zone trade data, as investors awaited further indications on how long the Federal Reserve will keep its stimulus policies in place.

During European afternoon trade, EUR/USD edged up 0.12% to 1.3512, the highest since November 7, from Friday’s close of 1.3495.

The pair was likely to find support at 1.3431, Friday’s low and resistance at 1.3546, the high of November 6.

The dollar eased as comments by Fed Chairwoman nominee Janet Yellen last week were seen as reiterating the need for continued stimulus to ensure a robust economic recovery.

Investors were turning their attention to the minutes of the Fed’s October meeting, as well as a speech by Fed Chairman Ben Bernanke on Wednesday for further indications on the future course of U.S. monetary policy.

The euro found support after Eurostat said the euro zone’s trade surplus widened to EUR13.1 billion in September from EUR8.6 billion a year earlier. The report said exports rose 3%, while imports were flat.

The euro was steady at two-week highs against the yen, with EUR/JPYinching up 0.01% to 135.22. 

The yen remained under pressure after Japanese Finance Minister Taro Aso said Thursday it is important to retain foreign exchange intervention as a policy tool to counter speculative moves in the currency market.

Elsewhere, the euro pushed higher against the pound, with EUR/GBPrising 0.21% to 0.8388.

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European stocks turn broadly higher after trade data; Dax up 0.74%

European stocks turned broadly higher on Monday, after positive euro zone trade balance data and as speculation the Federal Reserve could maintain the current level of its monthly bond purchases for an extended period of time supported equity markets. 

During European afternoon trade, the EURO STOXX 50 jumped 1%, France’s CAC 40 advanced 0.74%, while Germany’s DAX 30 climbed 0.74%. 

In a report, Eurostat said the euro zone's trade surplus widened to a seasonally adjusted EUR14.3 billion in September from EUR12.3 billion in August. Analysts had expected the trade surplus to widen to EUR14.2 billion in September. 

Global equities found support last week amid heightened expectations that the Fed will stick to its easy money policies for some time to come, after comments by Fed Chairwoman nominee Janet Yellen last week were seen as supportive of continued stimulus. 

Investors were also focusing on developments in Italy following a split within Silvio Berlusconi's party this weekend, which is a key coalition partner. 

On Saturday, Italian Interior Minister Angelino Alfano said that all five centre-right ministers would remain in government after a split in Silvio Berlusconi's People of Freedom party and that the stability of the ruling coalition was not at risk. 

Financial stocks were mixed, as French lenders BNP Paribas and Societe Generale climbed 0.73% and 1.22%, while Germany's Deutsche Bank rallied 1.09%. 

Among peripheral lenders, Spanish banks BBVA and Banco Santander jumped .143% and 1.70% respectively, while Italy's Intesa Sanpaolo and Unicredit surged 2.97% and 3.18%. 

Elsewhere, Sonova soared 6.51% after predicting that annual earnings would grow 14%, compared with a previous forecast of 9% to 13%. 

In London, FTSE 100 rose 0.49%, supported by strong gains in financial stocks. 

Shares in the Royal Bank of Scotland jumped 1.03% and Barclays gained 0.92%, while HSBC Holdings and Lloyds Banking advanced 0.71% and 0.85% respectively. 

Lloyds Banking earlier said that it agreed to sell its Scottish Widows Investment division to Aberdeen, up 0.65%, for GBP560 million. The lender will receive a 9.9% stake in Scotland’s largest money manager. 

Meanwhile, mining stocks were mixed as Glencore Xstrata rose 0.79% and Vedanta Resources rallied 2.14%, while rivals Randgold Resources and Fresnillo plummeted 2.04% and 3.05%. 

In the U.S., equity markets pointed to a higher open. The Dow Jones Industrial Average futures pointed to a 0.25% increase, S&P 500 futures signaled a 0.09% rise, while the Nasdaq 100 futures indicated a 0.05% gain. 

Later in the day, the U.S. was to release private sector data on the outlook for the housing sector.

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Dollar slips against Euro and Yen

The dollar edged lower against the euro and the yen on Monday as optimism over proposed economic reforms in China bolstered sentiment and markets awaited further indications on how long the Federal Reserve will keep its stimulus policies in place.

During European late morning trade, USD/JPY edged down 0.13% to 100.13, holding below the two-month highs of 100.42 struck on Friday.

The dollar slid after comments by Fed Chairwoman nominee Janet Yellen last week were seen as reiterating the need for continued stimulus to ensure a robust economic recovery.

Investors were turning their attention to the minutes of the Fed’s October meeting, as well as a speech by Fed Chairman Ben Bernanke on Wednesday for further indications on the future course of U.S. monetary policy.

Elsewhere, the euro rose to more than one-week highs against the dollar, with EUR/USD edging up 0.08% to 1.3507 from Friday’s close of 1.3495.

The euro zone’s trade surplus widened to EUR13.1 billion in September from EUR8.6billion a year earlier, data on Monday showed, as exports rose 3%, while imports were flat.

The dollar pushed higher against the pound, with GBP/USD slipping 0.15% to 1.6095.

Elsewhere, the dollar was lower against the Swiss franc, with USD/CHFdown 0.19% to 0.9398.

The greenback was broadly lower against the Australian, New Zealand and Canadian dollars, with AUD/USD rising 0.29% to 0.9398, NZD/USDclimbing 0.45% to trade at 0.8372 and USD/CAD sliding 0.15% to 1.0421.

The growth linked dollars were boosted after China outlined a series of broad economic reforms late Friday, including the easing of the one-child policy, reinforcing investor confidence in the country.

The U.S. dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, slipped 0.10% to 80.79. 

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Asian shares mostly higher as Nikkei continues upward streak

Japanese stocks rose on Monday, continuing a run that saw the best weekly gain for the index this year last week on a weak yen, while Asian shares generally gained on a more detailed blueprint for reform in China that held out prospects of greater foreign investment opportunities.

Japan's Nikkei rose 0.42%, adding to a 7.7% jump last week--the index's best weekly gain so far this year. Hong Kong's Hang Seng index surged 2.17% in morning trade and Shanghai's Composite index was up 1.39% as China released more details of its economic reform plans in the coming decade.

Beijing late Friday released a reform plan that called for opening the financial sector to more foreign investment and a revamp of initial public offerings, particularly for state-owned companies.

The document came after the Chinese Communist Party leadership ended a meeting on Tuesday last week with only abroad outline of reform plans.

A weaker yen lifted the Nikkei as well, though the currency has strengthened slightly in midday trade, but remains solidly above 100 yen to the dollar.

South Korea's Kospi rose 0.5% and Australia's S&P/ASX 200 dropped 0.6%.

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