Market Roundup
• US July Employment trends 128.3 vs 127.9 previous.
• Canada building permits value plunges 5.5 pct in June vs +1.5% forecast; Drop in multi-family unit plans.
• USD climbs on rate-hike bets JPY hit hard; oil +3%.
• GBP pinned near 3-wk lows, bets against the pound at record high.
• Most Latin American stocks, currencies rise on global risk appetite as US growth expected to trickle down Latin America.
• OPEC: Despite recent bounce sees oil lower next 1-3 month.
Looking Ahead - Economic Data (GMT)
• 01:30 Australia NAB Business Confidence Jul 12-previous
• 01:30 Australia NAB Business Confidence Jul 6- previous
• 01:30 China PPI YY* Jul forecast-2%, -2.60%- previous
• 01:30 China CPI YY* Jul forecast -1.8%, 1.90%- previous
• 01:30 China CPI MM* Jul forecast -0.1%, -0.10%- previous
Looking Ahead - Events, Other Releases (GMT)
• No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.1034 levels and currently trading at 1.1083 levels. The pair has made session high at 1.1096 and hit lows at 1.1071 levels. The euro declined against the dollar on Monday, as the dollar gained strength on stronger-than-anticipated jobs report for July on Friday which raised expectations that the Federal Reserve is closer to raising interest rates. Nonfarm payrolls rose by 255,000 jobs in July, more than the forecast of 180,000 for the month, and wages picked up, with hiring broadly based across the sectors of the economy. The data helped offset concerns about sluggish economic indicators, including preliminary estimates of weak gross domestic product for the second quarter, released in late July. The dollar index, which tracks the greenback against a basket of six major rivals, gained 0.21 percent to 96.293. The dollar was up 0.62 percent against the Japanese yen at 102.44. Most economists and investors see a U.S. rate hike as most likely in December, and believe the Fed will be hesitant to act before the U.S. presidential election in November.
GBP/USD is supported in the range of 1.3011 currently trading at 1.3036 levels. It reached session high at 1.3075 and hit low at 1.3026 levels. The British pound declined against the dollar on Monday amid widening rate differentials between the United States and Britain after robust jobs numbers strengthened speculation of a rate hike by the Federal Reserve. In contrast, the Bank of England kick-started its quantitative easing programme on Monday, have lowered interest rates to record lows last week to stave off an economic slowdown in Britain after the Brexit vote. The BoE also cut growth forecasts for next year and hinted at more easing to come, all of which is likely to see the pound stay under pressure in the medium term. On the data front, British industrial data and trade deficit for June is due on Tuesday. Forecasts are for industrial production to show a 0.1 percent rise from a month earlier, while the trade deficit is expected to widen. Sterling was down 0.25 percent at $1.3035, not far from a three-week low of $1.3021 touched on Friday.
USD/CAD is supported at 1.3100 levels and is trading at 1.3163 levels. It has made session high at 1.3175 and lows at 1.3134 levels. The Canadian dollar gained slightly against its U.S. counterpart on Monday as pressure on the currency triggered by recent weak domestic data was offset by higher oil prices. Oil prices jumped amid renewed speculation that OPEC would try to restrain output, easing oversupply worries that had pressured the market to three-month lows last week. On the data front, the value of Canadian building permits declined 5.5 percent in June from May, data from Statistics Canada showed on Monday. Construction intentions in multi-family dwellings and institutional buildings led the drop. The Canadian dollar was last trading at C$1.3164 to the greenback, or 75.96 U.S. cents. Canadian government bond prices were slightly higher across the maturity curve, with the two-year price up 2 Canadian cents to yield 0.51 percent and the benchmark 10-year rising 4 Canadian cents to yield 1.067 percent.
AUD/USD is supported around 0.7596 levels and currently trading at 0.7652 levels. It hit session high at 0.7671 and made session lows at 0.7631 levels. The Australian dollar held near recent peak against the dollar on Monday as investors seeking to escape negative interest rates in Europe and Japan continued to put money into the currency. Despite last week's interest rate cut by the Reserve Bank of Australia (RBA) to a record low 1.5 percent, the currency still offers yields that are among the highest compared to other developed countries. While the Aussie, seen as a proxy for China plays, did not move on Chinese July trade data issued on Monday, some traders saw as encouraging how iron ore imports rose 8.3 percent from the previous month, to its second-highest on record. In the late American trading hours the Aussie was last trading at $0.7649. A rise above its 10-week peak of $0.7676 touched on July 15 would push it to its highest level since early May.
Equities Recap
European stock markets rose on Monday, propped up by gains in the shares of major banks and other financial stocks, while Dutch firm PostNL surged after results.
UK's benchmark FTSE 100 closed up by 0.2 percent, the pan-European FTSEurofirst 300 ended the day up by 0.03 percent, Germany's Dax ended up by 0.7 percent, France’s CAC finished the day up by 0.1 percent.
Wall Street receded from record highs on Monday as a drop in healthcare stocks offset gains caused by higher oil prices and a strong jobs report.
Dow Jones closed down by 0.08 percent, S&P 500 ended down by 0.10 percent, Nasdaq finished the day down by 0.15 percent.
Treasuries Recap
U.S. Treasuries debt yields were up slightly on Monday, with longer-dated maturities edging up to their highest level in more than two weeks on a modest rise in expectations that the Federal Reserve could raise short-term interest rates by year-end.
Benchmark 10-year Treasury notes fell 2/32 in price to yield 1.586 percent in a quiet session with no major data releases. Thirty-year Treasury bonds rose 6/32 in price to yield 2.302 percent. Yields on both Treasuries had earlier risen to their highest since July 21.
The 2-year note was little changed from Friday's close, its yield at 0.73 percent.
Commodities Recap
Oil prices settled up nearly 3 percent on Monday amid renewed speculation that OPEC would try to restrain output, easing oversupply worries that pressured the market to three-month lows last week.
U.S. West Texas Intermediate (WTI) crude settled up $1.22, or 2.9 percent, at $43.02 per barrel. WTI hit April lows beneath $40 a barrel last week. Brent crude rose $1.12, or 2.5 percent, to settle at$45.39.
Gold steadied after falling to a one-week low on Monday as downward momentum from stronger-than-expected U.S. jobs figures late last week lost steam, with concerns over negative global economic sentiment lending support.
Spot gold was up 0.07 percent at $1,335.99 an ounce by 3:39 p.m. EDT (1939 GMT), after dipping to $1,329.55, the lowest since July 27. U.S. gold for December delivery settled down 0.2 percent at $1,341.30.
