Market Roundup
• US Adv Goods Trade balance Jul, -65.10 bln, -64.01 bln previous.
• US Wholesale Inventories Adv Jul, 0.4%, 0.7% previous.
• US Retail Inventories Adv Jul, -0.2%, 0.5% previous.
• US Dallas Fed Mfg Bus Idx Aug, 17.00, 16.80 previous.
• EU urges swifter Brexit talks as London seeks "flexibility".
• Euro zone lending robust but money supply growth slows: ECB data.
• US crude falls 2.44% but gasoline jumps 2.92% as Harvey hits refiners.
• Harvey's net impact on U.S. growth 'very small' -J.P. Morgan.
Looking Ahead - Economic Data (GMT)
• 23:30 Japan All Household spending YY Jul, 0.7%, 2.3% previous
• 23:30 Japan All Household spending MM Jul, -0.5%, 1.5% previous
• 23:30 Jobs/Applicants ratio Jul, 1.52, 1.51 previous
• 23:30 Unemployment Rate Jul, 2.8%, 2.8% previous
Looking Ahead - Events, Other Releases (GMT)
• 15:00 Fed’s Charles Evans speaks at conference in Chicago
Currency Summaries
EUR/USD is likely to find support at 1.1926 levels and currently trading at 1.1978 levels. The pair has made session high at 1.1986 and hit lows at 1.1923 levels. Euro jumped higher against the dollar in the on Monday as U.S. dollar dropped to a more than 2-1/2-year low against the euro, following comments from central bankers on Friday and worries over Tropical Storm Harvey. The greenback extended losses after tumbling on Friday after U.S. Federal Reserve chair Janet Yellen did not mention monetary policy at a summit of central bankers in Wyoming, moderating expectations the Fed will raise interest rates further this year. European Central Bank President Mario Draghi's decision to hold back from talking down the euro at the central bankers' meeting in Jackson Hole, despite the currency's double-digit gains this year, continued to weigh on the dollar and sent the euro up as much as 0.5 percent on the day to $1.1983 Monday, its strongest since January 2015. The dollar also weakened after Tropical Storm Harvey paralyzed Houston, Texas, the nation's fourth-biggest city, spurring worries about the storm's potential impact on the U.S. economy. The dollar index, which measures the greenback against a basket of six major rivals, fell as much as 0.6 percent to hit its lowest since May 2016 of 92.184.
GBP/USD is supported in the range of 1.2868 levels and currently trading at 1.2935 levels. It reached session high at 1.2941 and dropped to session low at 1.2902 levels. The British pound rose against the greenback on Monday as the dollar weakened after a gathering of central bankers in Jackson Hole, Wyoming. The dollar stumbled after Federal Reserve Chair Janet Yellen made no reference to U.S. monetary policy in her speech at the Jackson Hole symposium, which disappointed investors who had hoped for hints on the Fed's plans for interest rates. Harvey, the most powerful hurricane to strike the southern U.S. state in more than 50 years when it came ashore on Friday, dumped more rain on Houston on Monday, and the flooding could worsen as engineers release water from overflowing reservoirs to keep it from jumping dams and surging uncontrollably. The uncertainty pushed investors toward safe-haven assets, with gold rising to its highest in nearly 10 months. A public holiday in global foreign exchange capital London kept trading volumes thin. Investors were also looking ahead to Friday's August U.S. non-farm payrolls report for further trading incentives.
USD/CAD is supported at 1.2400 levels and is trading at 1.2492 levels. It has made session high at 1.2500 and lows at 1.2441 levels. The Canadian dollar firmed marginally against the dollar on Monday as the greenback weakened after Tropical Storm Harvey flooded the country's fourth-largest city. The U.S. dollar, which slumped on Friday after U.S. Federal Reserve Chair Janet Yellen failed to mention monetary policy at a meeting of central bankers in Wyoming, extended its losses to 16-month lows against a basket of major currencies. The decline came amid concerns about how Tropical Storm Harvey might impact the country's economy.The Canadian dollar also shrugged off the latest NAFTA comments by U.S. President Donald Trump, who tweeted that Mexico and Canada were both being "very difficult" and again raised the possibility of scrapping the free trade agreement. The Canadian dollar, which has strengthened more than 2.5 percent in the last two weeks and was outperforming other major currencies, traded between C$1.2445 and C$1.2485, and was on track to test the recent high of C$1.2414, or 80.55 U.S. cents. The greenback's weakness this year, along with a string of robust domestic economic data, has helped propel the Canadian dollar up 7.5 percent so far this year.
AUD/USD is supported around 0.7919 levels and currently trading at 0.7964 levels. It hit session high at 0.7971 and made session lows at 0.7938 levels. The Australian dollar moved higher against dollar on Monday as greenback extended losses after a central bank meeting in Jackson Hole, Wyoming as markets were worried about the impact of Tropical Storm Harvey on the U.S. economy. The Australian dollar rose 0.05 percent to $0.7938, as the U.S. dollar fell against a basket of currencies and hit multi-year lows against the euro, while the New Zealand dollar was poised for its biggest monthly drop since January 2016.With a thin economic data calendar on either side of the Tasman sea, traders looked abroad for market cues. The greenback extended last Friday's losses when Federal Reserve Chairman Janet Yellen made no reference to U.S. monetary policy in her Jackson Hole speech, disappointing some dollar bulls and those who had hoped for hints on the Fed's rate plans. U.S. crude oil futures fell more than 3 percent on Monday but gasoline prices surged to two-year highs as Tropical Storm Harvey kept hammering the U.S. Gulf Coast, knocking out several refineries which backed up crude supplies and disrupted fuel production.
Equities Recap
European shares fell on Monday as the euro strengthened after ECB chief Mario Draghi expressed no concern about a strong currency in a closely watched speech.
The pan-European FTSEurofirst 300 ended the day down by 0.50 percent, Germany's Dax ended down by 0.3 percent, France’s CAC finished the day down by 0.4 percent.
The S&P 500 and Dow ended little changed on Monday, with energy and bank shares lower as Tropical Storm Harvey crippled the U.S. energy hub in Texas, while tech and healthcare gave a boost to the Nasdaq.
Dow Jones closed down by 0.04 percent, S&P 500 ended up 0.04 percent, Nasdaq finished the day down by 0.28 percent.
Treasuries Recap
U.S. benchmark Treasury yields fell to two-month lows on Monday after the government saw strong demand for a five-year note auction, and as market participants waited on data that will culminate on Friday with the August employment report.
Benchmark 10-year notes gained 5/32 in price to yield 2.155 percent, the lowest since June 27. Traders said volumes were light before next Monday's Labor Day holiday.
Commodities Recap
Gold rallied to a 9-1/2-month high on Monday, breaching $1,300 per ounce as the dollar fell and the euro rose after the head of the European Central Bank (ECB) said that the euro zone's economic recovery had taken hold at a meeting of central bankers.
Spot gold rose 1.4 percent at $1,309.25 an ounce by 2:01 p.m. EDT (1801 GMT), after rising to its highest since early November at $1,309.98.U.S. gold futures settled up 1.3 percent at $1,315.30.
U.S. crude oil futures fell more than 3 percent on Monday but gasoline prices surged to two-year highs as Tropical Storm Harvey kept hammering the U.S. Gulf Coast, knocking out several refineries which backed up crude supplies and disrupted fuel production.
U.S. West Texas Intermediate (WTI) crude futures were down $1.48 or 3.1 percent to 46.39 at 1:31 p.m. EDT (1731 GMT) Brent crude futures were down 70 cents or 1.3 percent at $51.71 per barrel.
