Market Roundup
• US Pending Homes Index Jun 110.2, 108.6 previous.
• US Pending Sales Change MM Jun 1.5%, 0.7 forecast, 0.7% previous.
• US Chicago PMI Jul 58.9, 60 forecast, 65.7 previous.
• US Dallas Fed Mfg Business Index Jul 16.8, 15.00 previous.
• Fed's Fischer said political uncertainty holding back investment.
• Trump "100 percent" committed to take on tax reform in 2017-Cohn.
• Kremlin orders Washington to slash embassy staff in Russia.
• Trump aims at insurers in battle over healthcare subsidies.
• Still no solid evidence inflation will remain on target - ECB's Linde.
• Euro zone core inflation unexpectedly picks up in July.
• UK housing and consumer demand weaken as Bank of England meets.
• Canadian producer prices fall on cheaper energy products.
• China central bank to ensure smooth, orderly deleveraging, assistant governor says.
• Mexican growth eases slightly in second quarter, services cooling.
• Venezuela dollar bonds fall on US sanction fears after election.
• Moody's: South Africa's rate cut signals political pressure on c.bank.
Looking Ahead - Economic Data (GMT)
• 00:30 Japan Nikkei Mfg PMI Jul 52.2 previous
• 01:45 China Caixin Mfg PMI Final Jul 51.6 previous
• 04:30 Australia RBA Cash Rate Aug 1.50% forecast, 1.50 previous
Looking Ahead - Events, Other Releases (GMT)
• No significant events
Currency Summaries
EUR/USD is likely to find support at 1.1700 levels and currently trading at 1.1830 levels. The pair has made session high at 1.1844 and hit lows at 1.1727 levels. Euro rose against the dollar on Monday as U.S. political woes and lukewarm economic data pushed the dollar to multi-year lows and dampened expectations of another Federal Reserve rate hike this year. Data on Friday showed growth in the world's largest economy picked up in the second quarter, but labour costs rose less than expected, stoking concerns that inflation will remain low. Hopes that the Trump administration will be able to push through tax reforms and economic stimulus in the near future, which are seen as dollar-positive factors, also faded after the U.S. Senate on Friday failed to dismantle Obamacare. The single currency is the best performer in the G10 FX universe and has gained more than 11 percent against the dollar this year with the bulk of the gains coming in the last three months. Meanwhile, the dollar index, which measures the greenback against a basket of six major currencies, hit its lowest since early May 2016 of 92.78. The euro hit more than 2-1/2-year peaks against the dollar earlier in the session at 1.1844. The euro was last on track to gain 3.6 percent against the dollar in July to mark its biggest one-month percentage gain since March 2016.
GBP/USD is supported in the range of 1.3055 levels and currently trading at 1.3190 levels. It reached session high at 1.3201 and dropped to session low at 1.3111 levels. Sterling rose against the dollar on Monday to hit 10-month high, as investors eyed this week's Bank of England "Super Thursday" for a steer on whether record-low interest rates could soon be lifted for the first time in more than a decade. Sterling has been supported in recent weeks by expectations that the Bank might finally be getting ready for a hike after a series of hawkish comments from policymakers, but Governor Mark Carney and most of his top officials seem set to remain in wait-and-see mode for now. Data showing Britain's housing market and consumer economy lost a small amount of momentum last month as mortgage approvals dropped to a nine-month low and unsecured lending growth slowed further had little impact on the currency. But the numbers added to a run of weak data which, along with deep uncertainty about the impact of Brexit on the economy, have cooled the speculation that the BoE is poised to start removing its crisis-level stimulus. The BoE will also publish a quarterly Inflation Report on Thursday, with economists expecting the Bank to push up its inflation forecasts slightly but to lower its projection for growth after the weak start to the year.
USD/CAD is supported at 1.2409 levels and is trading at 1.2457 levels. It has made session high at 1.2528 and lows at 1.2440 levels. The Canadian dollar strengthened against its U.S. counterpart on Monday as higher oil prices and a weaker dollar across the board boosted Canadian dollar. The lonnie has rallied more than 10 percent since early May, including 4 percent this month, as the Bank of Canada raised interest rates for the first time in nearly seven years. Data on Friday showing robust growth in the domestic economy in May has supported expectations that the central bank will hike again in the coming months. Oil prices were near two-month highs on Monday, putting July on track to become the strongest month so far this year, as news of a producers' meeting next week added to bullish sentiment driven by the threat of U.S. sanctions against OPEC-member Venezuela. The Canadian dollar was last trading at C$1.2472 to the greenback. On the data front, Canadian producer prices fell more than expected in June as energy and petroleum products saw their largest decline since February of last year, data from Statistics Canada showed. The currency traded in a range of C$1.2442 to C$1.2530. On Thursday, it touched its strongest in more than two years at C$1.2414.
AUD/USD is supported around 0.7933 levels and currently trading at 0.8000 levels. It hit session high at 0.8002 and made session lows at 0.7957 levels. The Australian dollar steadied near a two-year peak on Monday, on track for its best monthly performance since January as Aussie was boosted by higher oil prices and U.S. dollar fell to its lowest level in over a year against a basket of major currencies. The Australian dollar stood at $0.7995, not far from $0.8066 touched on Thursday, its highest since May 2015. The Aussie climbed about 0.9 percent last week and has added 3.8 percent this month so far. Underpinning sentiment were solid data on the Chinese economy and an 8 percent jump in futures for iron ore, Australia's single biggest export earner. The currency's uphill trek was partly interrupted by the Reserve Bank of Australia (RBA), which last week emphasised the need for policy rates to stay at record lows. The RBA will hold its monthly policy meeting on Tuesday, at which it is widely expected to keep rates at 1.50 percent after last easing a year ago. Investors will keep a keen eye on second quarter US labour data due on Wednesday. A weaker report will likely pressure the dollar further.
Equities Recap
Weakness among tobacco stocks and some broker downgrades weighed on European shares, sending them lower on the final trading day of July as analysts dissected what was beginning to look like an "underwhelming" earnings season.
UK's benchmark FTSE 100 closed up by 0.1 percent, the pan-European FTSEurofirst 300 ended the day down by 0.07 percent, Germany's Dax ended down by 0.4 percent, France’s CAC finished the day down by 0.6 percent.
The Dow Jones Industrial Average hit a record closing high on Monday, helped by Boeing, while selling in Facebook, Alphabet and other technology companies checked the S&P 500 and pulled the Nasdaq lower.
Dow Jones closed up by 0.31 percent, S&P 500 ended down 0.92 percent, Nasdaq finished the day down by 0.39 percent.
Treasuries Recap
U.S. Treasury yields rose on Monday before a heavy week of data, which will culminate in Friday's employment report for July, and as investors waited on Wednesday's refunding announcement for the coming quarter.
Benchmark 10-year notes 2/32 in price to yield 2.292 percent, up from 2.287 percent on Friday.
Commodities Recap
Gold hit its highest in almost seven weeks on Monday, boosted by a struggling dollar and U.S. economic data that cast doubt on whether the Federal Reserve will raise rates again this year.
Spot gold was down 0.1 percent at $1,267.4 an ounce by 2:00 p.m. EDT (1800 GMT), after rising to its highest since June 14 at $1,270.98. It is on course for a 2.1 percent rise this month, its strongest monthly performance since February. U.S. gold futures settled down 0.1 percent at $1,266.60.
Oil prices were near two-month highs on Monday, putting July on track to become the strongest month so far this year, as news of a producers' meeting next week added to bullish sentiment driven by the threat of U.S. sanctions against OPEC-member Venezuela.
Benchmark Brent crude traded down 19 cents or .36 percent at $52.33 a barrel at 12:00 p.m. (1600 GMT). Brent earlier hit $52.92 a barrel, its highest since May 25. U.S. light crude oil traded down 40 cents or .8 percent at $49.31 a barrel.
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