Dollar slides across board, hits 2-mth low vs euro… Dollar hits 2-mth low vs basket of currencies… Focus on fate of U.S. automakers, Fed rate decision

The U.S. dollar fell to two-month lows against the euro and a basket of currencies on Monday, pressured by uncertainty over the fate of U.S. automakers and reduced safe-haven flows.

The dollar was starting to respond negatively to concerns about further weakness in the U.S. economy, analysts said, after a run of weak data caused an exodus from risky positions and increased flight-to-quality buying in the currency.

Investors shunned the greenback amid fears a failure of one or more of the automakers could exacerbate a year-long recession and drag down other companies.

“The uncertain outlook for the U.S. automakers continues to keep investors wary of over exposure to the dollar at this point,” said Omer Esiner, senior market analyst at Ruesch

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Senate rejects auto bailout…  ECB pushes back from the rate cut table…  Goldman and Citigroup predict a dollar fall…  China to continue to appreciate… And Now… Today’s Pfennig!

Good day… Not sure when all of you will be receiving this today, as it took nearly over a half hour for my computer to boot up this morning. But its all good news for currency investors, so I’ll get it written and out to you as quickly as I can. The dollar slowed its decent overnight, but continued to fall vs. most of the major currencies as the US Senate rejected the $14 billion bailout for the auto industry.

The big winner in the Senate rejection of the bailout plan was the Japanese yen,

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Gold surge fuelled by inflation fears… Deflation seen short-lived…  Platinum boosted, helped by auto sector optimism

Gold surged on Monday, helped by higher oil prices, a lower dollar and investor concern about inflationary pressures given the large amounts of money being pumped into the global economy.

Autocatalyst material platinum jumped more than 6 percent to $840 an ounce, while palladium gained more than 11 percent to $178 on growing optimism about a rescue for the auto industry in the United States.

Spot gold rose nearly 3 percent to $776.70 an ounce and was up at $773.90/775.90 at 1030 GMT from $754.60 in New York late on Friday, when it fell to $740.40, the lowest since November 20 in a commodities-wide sell-off.

To some, talk of inflation is premature given the world is currently grappling with the prospect of deflation, but forward looking investors are

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A chronology of the recent global market chaos:

September 14/15 - Investment bank Lehman Brothers Holdings files for bankruptcy protection; Merrill Lynch to be taken over by Bank of America Corp.

September 16 - U.S. Federal Reserve announces plan for $85 billion (49 billion pound) loan to American International Group in return for an 80 percent stake in the insurer; Barclays buys parts of Lehman’s North American assets for $1.75 billion.

September 17 - British bank Lloyds TSB Group agrees to rescue rival HBOS, scooping up Britain’s biggest home loan lender in an all-share deal.

September 19 - U.S. Treasury Secretary Henry Paulson calls for the government to spend billions of dollars to take toxic mortgage assets off financial companies. Stock markets soar.

September 20 - Details emerge of the $700 billion U.S. plan.

September 21 - Goldman Sachs Group and Morgan Stanley become bank holding companies regulated by the Fed.

September 22 - Nomura Holdings says

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Dan Denning says the bailout bill that just passed Congress is a recipe for "massive inflation." In 1931, during the Great Depression, it was a different story. Back then, treasury secretary Andrew Mellon told Herbert Hoover: "Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate. Purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people."

US Energy Secretary Samuel Bodman says the America's  "nuclear renaissance" could be derailed by the credit crisis.

But Smart Commodities UK editor Garry White says a number of nuclear power projects are already underway in other parts of the world. India plans to build between 18 to 20 new nuclear plants over the next 15 years. Even the Middle East is shifting to the atom for its future energy needs.

Nuclear plants are also proven to be effective at water desalination. This will be vital in emerging markets, where populations are rising rapidly.

by Edward Hugh: BarcelonaWell the action in Russia this week has moved on slightly, and the damage has started to spread from pressure on the domestic stock market (accompanied by capital flight) to the real economy - via a very rapid tightening in credit conditions for Russian domestic users. We are also seeing a rapid slowdown in Russian manufacturing industry as internal demand slows while the inflation-driven decline in cost competitiveness continues to make imported products (where available) an attractive alternative to the home produced variant.Emerging-market bonds have been generally falling this week as the U.S. Senate's approval of a $700 billion bank rescue package did little to revive demand for riskier debt, and Russia has, unsurprisingly, been among the worst affected. The extra yield investors demand to own developing-nation bonds rather than U.S. Treasuries rose 8 basis points yestreday to 4.14 percentage points after widening ...

by Edward Hugh: BarcelonaWell the action in Russia this week has moved on slightly, and the damage has started to spread from pressure on the domestic stock market (accompanied by capital flight) to the real economy - via a very rapid tightening in credit conditions for Russian domestic users. We are also seeing a rapid slowdown in Russian manufacturing industry as internal demand slows while the inflation-driven decline in cost competitiveness continues to make imported products (where available) an attractive alternative to the home produced variant.Emerging-market bonds have been generally falling this week as the U.S. Senate's approval of a $700 billion bank rescue package did little to revive demand for riskier debt, and Russia has, unsurprisingly, been among the worst affected. The extra yield investors demand to own developing-nation bonds rather than U.S. Treasuries rose 8 basis points yestreday to 4.14 percentage points after widening ...

The NYSE is bracing itself for more trouble. The Wall Street Journal reports that the exchange has lowered the threshold for halting trade on single-day losses. A 1,100 point fall (roughly 10%) before 2pm will prompt a shutdown of the market for at least 30 minutes.

U.S. stocks soared yesterday (Tuesday) - with the Dow Jones Industrial Average gaining 485 points in posting its third-biggest point gain ever - as investors surged back into stocks just one day after the surprise rejection of a $700 billion bailout plan touched off a record sell-off.