Market Roundup
• Markit US manufacturing sector flash Oct PMI 53.2 vs forecast 51.5, Sept final 51.5.
• Fed's Bullard says one rate increase is all that's needed for now.
• Fed dove Evans: need to get to inflation goal sooner.
• Fed's Dudley: US regulators need better Treasury market data to analyze risks, liquidity.
• Bank of Canada renews 2 percent inflation target for 5 more years.
• Canada August wholesale trade increases 0.8% vs 0.6% forecast.
• Belgian PM says cannot unblock EU-Canada trade deal for now.
• Mexico half-month inflation 0.49% vs forecast 0.49%; y/y 3.09% vs forecast 3.08%.
• Russia says oil output freeze effective for markets stabilization.
• Fed says sees stable markets in the annual statement on capital.
Looking Ahead - Economic Data (GMT)
• No Significant Data
Looking Ahead - Events, Other Releases (GMT)
• No Significant Events
Currency Summaries
EUR/USD is supported at 1.0857 levels and currently trading at 1.0877 levels. The pair has made session high at 1.0895 and hit lows at 1.0868 levels. The euro declined against the dollar on Monday as recent upbeat US economic data and hawkish comments from Federal Reserve officials has increased bets that US Central Bank will hike interest rate in December. The Fed on course to raise rates three times between now and the end of 2017, Chicago Fed President Charles Evans said on Monday, so long as inflation expectations and the labor market continue to improve. Evans' comments built on remarks by San Francisco Fed President John Williams on Friday and New York Fed President William Dudley on Oct. 19. On the data front, U.S. manufacturing reached a one-year high this month reassured traders after a reading last week showed U.S. home resales in September beat expectations. The euro declined against the dollar in the US session to trade at $1.0878, near a more than seven-month low of $1.0857 touched Friday.
GBP/USD is supported in the range of 1.2149 levels and currently trading at 1.2222 levels. It reached session high at 1.2238 and dropped to session low at 1.2192 levels. The British pound slipped lower against the greenback on Monday as expectations that Britain's economy would suffer due to the country's likely exit from the European Union weighted on the pound. In the past few weeks politics has taken front seat, as concerns about a "hard" Brexit by Britain and a hardline stance by the EU in the negotiations saw sterling take a beating and fell to a record low on trade-weighted terms. After a strong second-quarter, Britain's economy is expected to slow and is forecast to grow at 0.3 percent in the third quarter. The report will be the first reading of how the broad economy has performed in the immediate aftermath of the shock vote to leave the EU in June. So far, all the evidence has suggested that the economy has held up well and the country is likely to dodge a recession.
USD/CAD is likely to find support at 1.3321 levels and is trading at 1.3377 levels. It has made intraday high at 1.3395 and lows at 1.3328 levels. The Canadian dollar weakened to hit seven-month low against US dollar on Monday as oil prices declined and investors raised bets that Federal Reserve will raise interest rate in December. The U.S. currency firmed in early trade on expectations that Fed will raise interest rates this year, and a receding chance of Donald Trump becoming U.S. president. U.S. crude was down 0.92 percent at $50.38 a barrel as Iraq said it wanted to be exempt from a deal by the Organization of the Petroleum Exporting Countries to cut production. Losses for the loonie came after the Bank of Canada acknowledged it had considered cutting interest rates at a policy meeting last week. The Canadian dollar was last trading at C$1.3339 to the greenback, or 74.97 U.S. cents, slightly weaker than Friday's close of C$1.3327.
AUD/USD is supported around 0.7570 levels and currently trading at 0.7603 levels. It hit session high at 0.7631 and made session lows at 0.7593 levels. The Australian dollar declined against US dollar on Monday as the dollar was boosted on expectations that the Federal Reserve will raise interest rates by end of this year. The U.S. central bank meets next week. It is expected to keep benchmark rates on hold but could give a clear signal of rises to come, possibly in December. The Australian dollar was at $0.7598, after finishing last week 0.1 percent lower. The falls largely came from a poor employment report last week that showed a drop of 53,000 full-time jobs in September as well as a decline in the number looking for work. Meanwhile, the U.S. dollar has been on a winning streak and within kissing distance of eight-month highs against a basket of currencies. Domestically, investors will hold their horses for the consumer price report which is expected to show underlying inflation rose around 0.4 percent for the third quarter and 1.6 percent for the year.
Equities Recap
European shares ended mixed on Monday with continued gains in banks offset by weakness among pharma stocks, while Spain outperformed on signs of an end to a political deadlock.
UK's benchmark FTSE 100 closed down by 0.4 percent, the pan-European FTSEurofirst 300 ended the day down by 0.01 percent, Germany's Dax ended down up 0.6 percent, France’s CAC finished the day up by 0.4 percent.
U.S. stocks touched their highest levels in two weeks as a flurry of deal activity and strong quarterly earnings boosted investor confidence.
Dow Jones closed down by 0.41 percent, S&P 500 ended down by 0.46 percent, Nasdaq finished the day up by 0.98 percent.
Treasuries Recap
U.S. Treasury yields lurched higher on Monday, in line with a rise in global bond yields and gains in U.S. stocks, with traders seeing little action ahead of next week's Federal Open Market Committee meeting.
In late morning trading, benchmark 10-year Treasury notes were down 8/32 in price to yield 1.770 percent, up from 1.74 percent late on Friday. The yield reached a four-month peak at 1.841 percent early last week.
U.S. 30-year bonds fell 24/32 in price to yield 2.530 percent, up from Friday's 2.492 percent. Earlier in the session, 30-year yields hit a more than one-week low of 2.47 percent.
Commodities Recap
Gold rose on Monday as the dollar retreated from an earlier near nine-month high, though uncertainty over the timing of a U.S. interest rate hike kept prices hemmed in a range.
Spot gold was at $1,271.11 an ounce by 1340 GMT, up 0.4 percent, while U.S. gold futures for December delivery were down $4.30 an ounce at $1,272.00.
Oil prices fell as much as 2 percent on Monday on news of the impending restart of Britain's Buzzard oilfield, and U.S. crude slid below $50 per barrel, which triggered technical selling.
Brent was down $1, or 1.9 percent, at $50.78 a barrel by 1:10 p.m. EDT (1710 GMT). Its session low was $50.50.
U.S. West Texas Intermediate (WTI) crude fell 99 cents, or 2 percent, to $49.86, after hitting a session low at $49.62. It was the first time since Oct. 18 that WTI had traded below $50.
