By Vicki Schmelzer

NEW YORK, Nov 23 (MNI) - With anecdotal reports suggesting that the recent mad dash for short-term U.S. Treasury instruments has been more about parking profits than panic about the larger global economy, the risk trade was back in vogue Monday, albeit a shadow of its former self, analysts said.

Event risk, in the form of U.S. and eurozone data Tuesday, could temper some of the market's enthusiasm for the risk trade in the short term, although risk appetite is expected to rebound more markedly in 2010, after year-end is over, they warned.

Stock and commodity prices edged higher and the dollar came under downward pressure Monday, with the euro retesting psychological resistance at $1.5000.

The S&P 500 closed up 1.36% at 1106.24, after trading in a 1091.36 to 1112.33 range.

The euro held at $1.4959 in late afternoon action, after trading in a $1.4834 to $1.5001 range.

The S&P 500 posted a new 2009 peak of $1113.68 November 16, and the euro posted a new 2009 peak of $1.5064 October 26.

Both the S&P and the euro will need to break and hold above their 2009 peaks for upward momentum to rise, analysts said.

The CBOE's volatility or VIX index closed at 21.08, after trading in a 20.90 to 21.98 range.

At the peak of risk appetite October 21, the VIX saw a low of 20.10 and then edged higher.

Later, on November 2, ahead of a week with Fed/BOE/ECB and non-farm payroll risk, the index hit a high of 31.84 - the highest level seen since July 8, when the VIX topped out at 33.05.

After breaking above its 55-day moving average from October 27 to November 5, the VIX closed below its 55-day November 7 and has remained below that level since.

Continued trading below the 55-day, at 24.22 Monday, would suggest scope for a return to the October low around 20.0, analysts said.

The Reuters-Jefferies CRB index closed up 0.13% at 274.95, after trading in a 274.58 to 279.44 range. The index stalled just shy of the 280.13 peak seen November 18.

The CRB posted a new 2009 high of 285.18 October 21, which put the index up 19.5% year-to-date at the time.

While FX, stocks and commodities explores well-established ranges, gold continued to press higher on solid global demand.

Spot gold was trading at $1165.25/oz Monday, after trading in a $1152.45 to $1173.50 (new life-time high) range.

With the precious metal trading in "non-man's land" recently, the market is geared up for a move to the next "round" number - $1200, traders said.

Traders remained wary of the thin liquidity conditions that may develope in coming weeks, especially in emerging markets, while size and depth are at times already a problem..

Earlier Monday, a Fitch ratings downgrade of Mexico's long term foreign debt rating to BBB, the second lowest investment grade, prompted Mexican peso strength rather than weakness, as might be expected.

Dollar-peso fell from a peak around Mxn13.1120 to Mxn13.0000 in less than ten minutes and over the course of the next half hour bottomed out around Mxn12.8565 before stabilizing at higher levels.

The pair held around Mxn12.9700 into the close.

The market had already priced in the Fitch downgrade, and was left scrambling to square short peso positions when the announcement came, analysts said.

With global investors seen holding more sizable than usual emerging market long positions, any unexpected exodus out of these trades could wreak more havoc than in the major currencies.

"It takes a lot less push to move dollar-Brazil lower than it does to push dollar-euro lower, said Bob Lynch, senior currency strategist at HSBC.

In terms of the majors in the short-term, he saw event risk in Tuesday's German IFO business sentiment data as well as the afternoon release of the Federal Reserve's minutes of the November 3-4 meeting.

"The FOMC minutes may stir things up a bit," Lynch said.

Ashraf Laidi, chief currency strategist at CMC Markets, maintained that any new dollar trend will likely hinge on Tuesday's release of the second revision to US Q3 GDP.

The median estimate in a Market News survey of economists looks for GDP to be revised to +2.8% from the preliminary +3.5% reading (estimates range from +2.5% to +3.4%).

"If we get a figure above 3.0% and personal spending has little or no revisions, then we could see the $1.5090s," Laidi said.

He noted also that German IFO data, due out ahead of the Q3 US GDP release, could have an impact on euro sentiment, with spillover effects for other currencies.

The MNI median for November German IFO is 92.8 versus the 91.9 seen in October.

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