Market Roundup
• China brings U.S. tariff dispute to WTO, berates Washington for blocking judges.
• EU has Brexit message for May: Decide what you want .
• UK PM May did not set new date for vote on Brexit deal -source.
• ECB's Draghi warns that uncertainty is weighing on sentiment.
• ECB's Visco says austerity should be avoided where not necessary.
• U.S. shutdown costs pegged at $3 bln as government reopens.
• Oil tumbles 4 pct on growing U.S. supply, China trade worries.
Looking Ahead - Economic Data
• 28 Jan (16:45 ET/ 21:45 GMT ) New Zealand Dec Imports, 5.80 bln previous
• 28 Jan (16:45 ET/ 21:45 GMT ) New Zealand Dec Trade Balance, -861.0 mln previous
• 28 Jan (16:45 ET/ 21:45 GMT ) New Zealand Dec Exports, 4.94 bln previous
• (19:30 ET/ 00:30 GMT ) Australia Dec NAB Business Conditions, 11 previous
• (19:30 ET/ 00:30 GMT ) Australia Dec NAB Business Confidence, 3 previous
Looking Ahead - Events, Other Releases (GMT)
• N/A U.S. Federal Reserve's Federal Open Market Committee starts its two-day meeting on interest rates in Washington D.C.
• N/A Riksbank'S Stefan Ingves will participate in a panel discussion on fintech with Christine Lagarde at Paris Fintech Forum.
• 08:30 Swedish central bank Deputy Governor Martin Floden talks about Swedish economy and monetary policy in Sweden
• 08:30 Riksbank Deputy Governor Cecilia Skingsley will discuss the economic situation and current monetary policy in Vasteras, Sweden
• 15:30 Federal Reserve Bank of Dallas issues January Service Sector Outlook Survey in Dallas
Currency Summaries
EUR/USD: The euro strengthened to hit two-week high against the U.S. dollar on Monday, as traders dumped greenback ahead of the Federal Reserve's two-day policy meeting and trade talks between China and the United States. Policy makers on the Federal Open Market Committee (FOMC) begin meeting on Tuesday. They are expected to signal a pause in tightening and acknowledge growing economic risks. U.S.-China talks resume on Tuesday and Wednesday to see if the world's two largest economies can end their trade dispute. The euro rose to a near two-week peak at $1.1438. It last traded 0.18 percent at $1.1426. An index that tracks the dollar versus a basket of six major currencies was down 0.09 at 95.75 on Monday. Immediate resistance can be seen at 1.1449 (100 DMA), an upside break can trigger rise towards 1.1475 (23.6% retracement level).On the downside, immediate support is seen at 1.1377 (9 DMA), a break below could take the pair towards 1.1345 (61.8% retracement level).
GBP/USD: Britain's pound declined against the dollar on Monday, as traders approached the market with more caution, before crucial votes in the British parliament that will aim to break the Brexit deadlock. Traders last week pushed the pound higher as markets wait to get more clarity on Britain's Brexit negotiations with the European Union. With less than two months to go before the United Kingdom leaves the European Union, lawmakers have set up a series of votes in parliament on Tuesday through which parliament and the government will try to find a way forward. On Monday, the currency was last trading 0.30 percent lower at $1.3158 in late US session. Immediate resistance can be seen at 1.3210 (38.2% retracement level), an upside break can trigger rise towards 1.3302 (23.6% retracement level).On the downside, immediate support is seen at 1.3131(50% retracement level), a break below could take the pair towards 1.3056 (50% retracement level).
USD/CAD: The Canadian dollar weakened against its U.S. counterpart on Monday, pulling back from its highest in more than two weeks as oil prices fell and investors grew more worried about China's economy. Officials from China are due to visit Washington this week for the next round of trade negotiations with the United States. The trade dispute between the world's two largest economies could worsen the outlook for global growth. The price of oil fell after U.S. companies added rigs for the first time this year, a signal that crude output may rise further. At (2025 GMT), the Canadian dollar was last trading 0.3 percent lower at 1.3254 to the greenback. Immediate resistance can be seen at 1.3302 (5 DMA), an upside break can trigger rise towards 1.3340 (21 DMA).On the downside, immediate support is seen at 1.3196 (38.2% retracement level), a break below could take the pair towards 1.3085 (23.6% retracement level).
USD/JPY: The U.S. dollar fell against the Japanese yen on Monday, as investors gauged market volatility ahead of the U.S. Federal Reserve's policy meeting and U.S-China trade talks this week. U.S. policymakers are expected to signal on Wednesday a pause in their interest rate increases and to acknowledge growing risks to the U.S. economy. That will likely weigh on the dollar. Investors are also waiting for Chinese Vice Premier Liu He's visit to Washington on Jan. 30-31 for the next round of trade negotiations with the United States. The dollar was 0.14 lower versus the Japanese yen at 109.38. Immediate resistance can be seen at 109.51 (38.2% retracement level), an upside break can trigger rise towards 110.24 (23.6% retracement level).On the downside, immediate support is seen at 108.93 (50% retracement level), a break below could take the pair towards 108.65 (Jan 17th low).
Equities Recap
European shares slid on Monday as optimism about the end of a U.S. government shutdown faded and growth worries reared their head again.
UK's benchmark FTSE 100 closed down by 0.9 percent, the pan-European FTSEurofirst 300 ended the day down by 0.93 percent, Germany's Dax ended down by 0.6 percent, France’s CAC finished the day down by 0.8 percent.
U.S. stocks tumbled on Monday, as warnings from Caterpillar Inc and Nvidia Corp added to concerns about a slowing Chinese economy and tariffs taking a bite out of U.S. corporate profits.
Dow Jones closed down by 0.84 percent, S&P 500 ended down by 0.79 percent, Nasdaq finished the day up by 1.10 percent.
Treasuries Recap
U.S. Treasury bond prices rose on Monday, sinking yields, after $162 billion of new debt sold to strong demand.
Two-year bond yields, which are used as a proxy for market expectations of interest rate hikes, fell about half a basis point, and were last at 2.59 percent. The benchmark 10-year yield was down half a basis point at 2.75 percent.
Commodities Recap
Gold was little changed on Monday, hovering near the $1,300 mark as investors awaited further developments on the U.S.-China trade dispute and the Federal Reserve's interest rate trajectory.
Spot gold was near unchanged at $1,302.95 per ounce as of (2030 GMT), close to a June 14, 2018 peak scaled earlier in the session. U.S. gold futures settled up 0.4 percent at $1,303.10 per ounce.
Oil fell about 3 percent on Monday, its biggest one-day percentage drop in a month, after an increase in U.S. crude drilling pointed to further supply growth amid continuing concerns about a global economic slowdown.
Brent crude oil futures sank $1.71, or 2.8 percent, to settle at $59.93 a barrel, while U.S. West Texas Intermediate crude slumped $1.70, or 3.2 percent, to settle at $51.99 a barrel.
