Market Roundup
• US Core PCE price index YY 1.6%, 1.8% previous.
• US Consumption, adjusted 0.0% v 0.2% forecast, 0.0% previous.
• US Construction spending MM -0.2% v 0.4% forecast, 1.8% previous.
• US ISM Mfg PMI 54.8 v 56.5 forecast, 57.2 previous; Markit Mfg PMI final 52.8, 52.8 previous.
• Atlanta Fed model for Q2 at 4.3%.
• Trump says he is actively considering breaking up big banks -Bloomberg.
• THAAD missile defense system in S. Korea has initial operating capability to defend against incoming missiles - US officials.
• White House adviser Cohn says he is convinced Republicans have enough votes to pass healthcare plan -CBS news.
• US Treasury Secretary Mnuchin says it will take two years to get up to 3 pct GDP growth.
• US Congress negotiators reach a deal to fund the government through sept 30- senior congressional aide.
• US Commerce Secretary Ross says Trump admin having constructive trade discussions with china.
• Oil fell as U.S. drillers added nine oil rigs last week, bringing the count to the most since April 2015- Baker Hughes.
Looking Ahead - Economic Data (GMT)
• 01:30 Australia RBA Cash rate forecast 1.50%, 1.50%-previous
• 01:45 China Caixin Mfg PMI final forecast 51.2, 51.2-previous
Looking Ahead - Events, Other Releases (GMT)
• BOJ’s April monetary policy meeting minutes
• RBA meeting – interest rate decision
• Start of two-day FOMC meeting
Currency Summaries
EUR/USD is likely to find support at 1.0839 levels and currently trading at 1.0901 levels. The pair has made session high at 1.0923 and hit lows at 1.0897 levels. The dollar edged lower against the euro on Monday after weak U.S. factory and inflation. The personal consumption expenditures (PCE) price index excluding food and energy slipped 0.1 percent in March, the first and largest drop since September 2001. In the 12 months through March, the so-called core PCE price index increased 1.6 percent, the smallest gain since last July. That reading of the core PCE, which is the Fed's preferred inflation measure, fell short of the central bank's 2 percent target. In addition, the Institute for Supply Management (ISM) said its index of national factory activity dropped to a reading of 54.8 last month, the weakest reading since December. The euro initially rose against the dollar on Friday as the dollar retreated after downbeat US GDP data but gave up ground after traders booked profits. The euro was last up 0.2 percent against the dollar at $1.0905, after touching a session high of $1.0923 following the data. That session peak remained below last week's 5-1/2-month high of $1.0950.
GBP/USD is supported in the range of 1.2857 levels and currently trading at 1.2893 levels. It reached session high at 1.2933 and dropped to session low at 1.2901 levels. Sterling dipped against the dollar on Monday as sterling retreated against dollar after investors shrugged off weak U.S. factory activity and inflation data on the view that it was unlikely to impede a June interest rate increase from the Federal Reserve. U.S. factory activity slowed in April while consumer spending was unchanged in March and a key inflation measure recorded its first monthly drop since 2001, but economists still expect an interest rate increase in June as the labor market tightens. The Institute for Supply Management (ISM) said its index of national factory activity dropped to a four-month low of 54.8 in April from a reading of 57.2 in March. The weak reports on Monday came ahead of the Federal Reserve's two-day policy meeting on Tuesday. The Federal Reserve will meet for a two-day meeting on Tuesday and Wednesday, with a statement scheduled for release at 2 p.m. EDT (1800 GMT) Wednesday.
AUD/USD is supported around 0.7475 levels and currently trading at 0.7532 levels. It hit session high at 0.7540 and made session lows at 0.7522 levels. The Australian dollar recovered some ground against the dollar on Monday after data showed U.S. manufacturing slowed while consumer spending was flat. Data showed U.S. manufacturing activity slowed in April while consumer spending was unchanged in March and a key inflation measure recorded its first monthly drop since 2001. Despite the soft data, traders continued to see a 7-in-10 chance that the Federal Reserve will hike interest rates in June. The Australian dollar recovered to trade at $0.7520 in the late US session having touched $0.7440 last week, its lowest since mid-January. It posted a loss of 1.8 percent in April, the largest monthly loss this year. Data in Australia showed a sharp slowdown in home prices, which should help ease policymakers concern over the risks of a debt-fuelled real estate bubble. The Reserve Bank of Australia (RBA) holds its monthly policy meeting on Tuesday and is considered certain to hold rates at a record low 1.5 percent following two cuts last year. Economists expect forecast rates would be held steady and the majority predicted no change in the cash rate over the next 12 months.
USD/CAD is supported at 1.3612 levels and is trading at 1.3669 levels. It has made session high at 1.3675 and lows at 1.3637 levels. The Canadian dollar was little changed against its U.S. counterpart on Monday as oil prices fell, with the currency hovering above the 14-month intraday low struck in the previous session. Oil slipped more than 1 percent as rising output in Libya and increased U.S. drilling countered OPEC-led production cuts. Signs of slower-than-expected growth in manufacturing in China and a weaker figure for U.S. manufacturing sentiment also weighed on expectations for oil demand and the market. Data on Friday showed that Canada's economy stalled in February. But economists say that the economy remains on track for solid growth in the first quarter. Last week, the loonie fell 1.1 percent pressured by an uncertain outlook for the North American Free Trade Agreement and mortgage market concerns. The Canadian dollar was last trading at C$1.3666 to the greenback, or 73.24 U.S. cents, slightly weaker than Friday's official close of at C$1.3650, or 73.26 U.S. cents.
Equities Recap
Wall Street rose on Monday, boosted by gains in Apple and other big tech stocks that more than offset weak economic data and pushed the Nasdaq to another record high.
Dow Jones closes down 0.10 percent, S&P 500 ended up 0.20 percent, Nasdaq finished the day up by 0.75 percent.
Treasuries Recap
U.S. Treasury debt prices dropped on Monday in generally thin volume, pressured by comments from Treasury Secretary Steven Mnuchin saying the government is looking into the issuance of ultra-long-term bonds, or those with maturities beyond 30 years.
In late trading, benchmark 10-year U.S. Treasury notes were down 11/32 in price to yield 2.321 percent, up from Friday's 2.282 percent.
U.S. 30-year bond prices fell more than a point, yielding 3.002 percent, up from 2.952 percent late on Friday.
On the front end, two-year yields were at 1.277 percent, slightly up from Friday's 1.27 percent.
Commodities Recap
Gold prices fell 1 percent to a three-week low on Monday, pressured by rising U.S. stocks and an agreement that averted a U.S. government shutdown, dampening demand for non-interest paying bullion.
Spot gold was down 0.8 percent at $1,257.58 an ounce by 3:16 p.m. EDT (1916 GMT), after dropping to $1,253.66, the lowest since April 11 and just above the 200-day moving average at $1,251.93.U.S. gold futures settled down 1 percent at $1,255.50.
Oil slipped 1 percent on Monday as rising crude output on Libya and the United States countered OPEC-led production cuts aimed at clearing a supply glut.
Global benchmark Brent crude for July settled down 53 cents to $51.52 a barrel, while U.S. crude for June dropped 49 cents, or 1 percent, to $48.84 a barrel.
