Most major banks have stuck firmly to the view that the euro will fall toward parity with the dollar in the months ahead as the Federal Reserve begins to lift interest rates while the ECB takes the opposite course. "After a very positive stretch for equity markets last week, a sharp fall in commodity prices has sent the United Kingdom market lower", said Rebecca O'Keeffe, head of investment at stockbroker Interactive Investor. ECB President Draghi gave another hint that the ECB would increase monetary stimulus in December, saying that if the ECB decides in December "that the current trajectory of our policy is not sufficient to achieve our objective, we will do what we must to raise inflation as quickly as possible". Equities were quieter, with MSCI's broadest index of Asia-Pacific shares outside Japan off 0.2 percent. Wall Street could find support from news of another blockbuster merger. That pressured two-year German government debt yields down to a record low of -0.39% and weighed on 10-year Bunds, which surrendered eight basis points over the week as a whole. The health care sector was also in focus after Pfizer secured formal board approval on Sunday for its more than $150-billion acquisition of Botox maker Allergan, that will create the world's biggest drugmaker. As a result the premium offered by USA paper yawned out to 130 basis points, the fattest since 2006. The EMINI contract on the S&P 500 ESc1 was trading 0.1 percent firmer on Monday. Hong Kong's Hang Seng was flat and Australia's S&P/ASX 200 was up 0.5 per cent. In mainland China, the Shanghai Composite was up 0.4 per cent and the Shenzhen Composite was up 0.7 per cent. [IMM/FX] The euro traded heavily on the crosses, hitting a four-month low against the Australian dollar at A$1.4679 in early Asian trade on Monday. It also peeled off to 130.78 yen, again the lowest since April. Last week, USA stocks recorded their best week this year on gains by retailers and technology companies as investors put jitters about the Paris attacks behind them. "But with two of the world's major central banks about to head on divergent policy paths, can such smooth sailing continue over the months ahead?" they wondered. The 19 countries that use the euro currency saw economic activity grow 0.3 percent in the third quarter from the quarter before. "Increased policy tension is likely to mean that volatility remains elevated". The euro has ceded ground back to the USA dollar after a one-day burst of energy, with European Central Bank chief Mario Draghi pledging action again to boost eurozone inflation. Oil prices dipped, with USA benchmark prices trading around $41 a barrel, while copper lingered near its lowest point since 2009 and gold slipped for its second day in a row. The Euro weakened with expectations the European Central Bank will add to monetary stimulus in December weighing on the currency.

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