Market Roundup
• US Labor costs revised rev 2.2% v 2.4% forecast, 3.0% -previous.
• US Productivity revised rev 0% v 0% forecast, -0.6% - previous.
• US Markit comp final PMI 53.6, 53.9 - previous.
• US Durable goods, R MM -0.8%, -0.7% - previous.
• US Factory orders MM -0.2% v -0.2% forecast, 1.0% - previous.
• US ISM N-mfg PMI 56.9 v 57.0 forecast, 57.5 - previous.
• Mexico and the US reach agreement in sugar trade dispute – Sources.
• Oil fell 0.5% as Arab powers sever Qatar ties, citing support for militants.
• Federal funds futures imply traders see 52% chance Fed to raise rates to 1.25-1.50% at Dec meeting - CME group's Fedwatch.
• Survation poll: UK PM May's Conservatives on 40%, Labour on 39%
ahead of election.
• IMF warns US fiscal uncertainty, China's credit growth pose risk to Asia
Looking Ahead - Economic Data (GMT)
• 23:01 Great Britain BRC Retail Sales YY -0.50% forecast,5.6% - previous
• 01:30 Australia Current account balance 0 bln forecast, -3.9 bln - previous
• 04:30 Australia RBA Cash Rate 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 1.1200 levels and currently trading at 1.1255 levels. The pair has made session high at 1.1263 and hit lows at 1.1233 levels. Euro dipped against the dollar on Monday as traders doubted that any European Central Bank shift in policy stance could strengthen the euro further, while dollar repurchases after Friday's steep losses also helped the greenback. ECB policymakers are set to take a more benign view of the economy when they meet on Thursday and will even discuss dropping some of their pledges to ramp up stimulus if needed. Traders also bought back the dollar ahead of the ECB meeting after a softer-than-expected May U.S. employment report on Friday hit the currency and stoked doubts that the Federal Reserve would raise interest rates in the second half of this year. The euro was last down 0.3 percent against the dollar at $1.1252 after hitting $1.1285 on Friday, its highest since Nov. 9. The dollar index, which measures the greenback against a basket of six major rivals, was last up 0.1 percent at 96.825 after hitting a roughly seven-month low of 96.654 Friday.
GBP/USD is supported in the range of 1.2873 levels and currently trading at 1.2903 levels. It reached session high at 1.2941 and dropped to session low at 1.2904 levels. Sterling rose against the dollar on Monday as investors focused their attention on British election after an opinion poll showed Britain's ruling Conservative Party was comfortable in the lead ahead of Thursday's parliamentary elections. The pound was boosted after the election was called on bets a landslide win for Prime Minister Theresa May would translate into a stronger bargaining position in Britain's exit talks with the European Union, which begin on June 19. However, some recent polls have shown the race tightening. The pound had opened around half a cent down from Friday's close in Asian trading, as traders sold the currency after a militant attack in London over the weekend that killed seven and injured 48.But it recovered most of those losses when trade opened in Europe, and then climbed higher after an ICM poll showed May's Conservatives 11 points in front of the labour opposition. Sterling reached as high as $1.2940 after U.S. trade opened, its highest since May 26, and putting it up around a third of a percent on the day.
USD/CAD is supported at 1.3433 levels and is trading at 1.3473 levels. It has made session high at 1.3499 and lows at 1.3455 levels. The Canadian dollar was little changed against its U.S. counterpart on Monday as oil prices fell, while data showed home sales tumbled in Toronto, Canada's largest city. Prices of oil, one of Canada's major exports, reversed gains to trade down on concerns that top crude exporter Saudi Arabia and other Arab states' cutting of ties with Qatar accusing it of supporting extremism and undermining regional stability. Investors also reduced positions ahead of key event risks such as the British elections and European Central Bank monetary policy meeting. Domestic data on Friday showed that exports climbed to a record high in April and first-quarter labor productivity approached a three-year high, further evidence that Canada's economy was recovering from a long slump caused by low oil prices. The Canadian dollar last trading at C$1.3474 to the greenback. The currency traded in a range of C$1.3457 to C$1.3498.
AUD/USD is supported around 0.7440 levels and currently trading at 0.7485 levels. It hit session high at 0.7497 and made session lows at 0.7465 levels. The Australian dollar strengthened against the dollar on Monday as Australian dollar was boosted after better-than-expected Australian business inventories and other domestic data lessened the risk of a contraction in economic growth ahead of GDP data later in the week. The Australian dollar edged up to $0.7496, from $0.7423 early and away from a trough of $0.7372 touched last week. Underpinning sentiment was data showing Australian business inventories jumping 1.2 percent in the first quarter, against forecasts of 0.5 percent. That alone should add a much-needed 0.4 percentage points to economic growth. The Reserve Bank of Australia (RBA) holds its monthly policy meeting on Tuesday but is considered almost certain to hold rates at a record low 1.5 percent, as it balances the risk of fuelling further borrowing in the country's home market against tepid inflation. The majority of economists predicted rates would be held steady until the middle of next year, while 23 out of 49 forecast a rate hike by September next year against 5 seeing an easing.
Equities Recap
European shares slipped on Monday as energy stocks dragged and banks were led lower by Spain's Banco Popular on concerns that it could be wound down.
UK's benchmark FTSE 100 closed down by 0.3 percent, the pan-European FTSEurofirst 300 ended the day down by 0.12 percent, France’s CAC finished the day down by 0.7 percent.
US Stocks dipped on Wall Street on Monday as a drop in Apple partly offset gains in energy and financial shares, some of the market's worst performing sectors this year.
Dow Jones closed down by 0.10 percent, S&P 500 ended down 0.12 percent, Nasdaq finished the day down by 0.16 percent.
Treasuries Recap
U.S. Treasury debt prices fell on Monday in thin trading, as investors booked profits after gains the previous session on a U.S. employment report that underwhelmed expectations and suggested a more cautious Federal Reserve policy beyond June.
In late trading, U.S. 10-year Treasuries were last down 4/32 in price, with yields at 2.173 from 2.159 percent late on Friday.
U.S. 30-year bonds fell 10/32 in price, yielding 2.828 percent, compared with Friday's 2.812 percent.
Commodities Recap
Gold prices steadied after rising to a fresh six-week high on Monday as disappointing jobs data dimmed the prospects for aggressive U.S. interest rate increases, even though it was unlikely to deter a rate hike at this month's Federal Reserve policy meeting.
Spot gold was steady at $1,279.11 per ounce by 3:17 p.m. EDT (1917 GMT), after climbing 1.1 percent on Friday. It hit a peak of $1,283.27 early in the session, its highest level since April 21.U.S. gold futures rose 0.2 percent to settle at $1,282.70.
Oil prices fell nearly 1 percent on Monday on concerns that the cutting of ties with Qatar by top crude exporter Saudi Arabia and other Arab states could hamper a global deal to reduce oil production.
The news initially pushed Brent crude prices up as much as 1.6 percent as geopolitical fears rippled through the market. U.S. West Texas Intermediate futures settled 26 cents or 0.55 percent lower at $47.40.
