Market Roundup
- US Markit Mfg PMI slumps (Dec 51.2 v Nov 51.3), construction spending falls (Oct 0.3 v Nov -0.4%) first decline in nearly 1.5 yrs.
- Fed's Williams: 3-5 rates hikes this year, US economy in good shape, need to stay focused on econ in med term; USD value determined by markets is a factor that determines policy.
- Fed's Mester: gradual hike path appropriate, US econ sound, inflation will rise as oil stabilizes.
- China selloff sparks gloomy 2016 start for stocks, Yen, CHF & Gold rise, bond yields fall as investors seek safe havens.
- Middle East tensions boil as Saudi Arabia cuts ties with Iran, oil reverses early gains.
- Brazil posts 2015 trade surplus as weak BRL increases exports, recession curbs imports.
- Moody's: Oil and gas industry to cut spending in 2016 amid continued commodity price weakness.
- BoE expected to raise UK rates in Q2; low wage growth, Brexit a risk.
Looking Ahead - Economic Data (GMT)
- No Significant Data
Looking Ahead - Events, Other Releases (GMT)
- No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.0780 levels and currently trading at 1.0827 levels. The pair has made session high at 1.0862 and hit lows at 1.0780 levels. The dollar rose sharply against euro on Monday, after weak Chinese economic data fueled fears over global economic growth showed factory activity in China the world's second-largest economy declined sharply in December, sparking a 7-percent slide in Chinese shares that triggered a trading halt. However, U.S. data sparked further concern as factory activity weakened unexpectedly in December, U.S. manufacturing contracted further in December as lower oil prices undercut spending in the energy sector while construction spending fell in November for the first time in nearly 1-1/2 years, suggesting the economy ended 2015 with less momentum. The U.S. Institute for Supply Management (ISM) said its index of national factory activity fell to 48.2 from 48.6 in November and is now at its lowest level since June 2009.
USD/JPY is supported around 118.03 levels and currently trading at 119.32 levels. It hit session high at 120.49 and made session lows at 118.74 levels. The dollar slipped sharply lower to hit 11-week low against the yen on Monday, as disappointing Chinese factory data sparked a selloff in China's stock market which led increased demand for safe haven currency like Japanese yen and Swiss franc. Nervousness about the ongoing contraction among Chinese manufacturers despite Beijing's surprise currency devaluation in August sent traders to switch to safe heaven Japanese yen. The yen rose 0.7 percent against the dollar, to 119.40 yen, after hitting hit an 11-week high of 118.68 yen. Against the euro, the yen was last up 1 percent at 129.17 yen, after earlier rising as high as 128.64 yen.
USD/CAD is supported at 1.3923 levels and is trading at 1.3933 levels. It has made session high at 1.3900 and lows at 1.3923levels. The Canadian dollar weakened against its U.S. counterpart on Monday, together with broader losses for commodity currencies after a 7-percent drop in Chinese shares triggered a flight to safe-haven assets. The currency pair had initially declined towards lower levels in the early US session ,However crude oil prices erased the an early rally as concern about Middle East tensions gave way to worries about slowing global economic growth and sliding stock markets. The currency's strongest level of the session was C$1.3815, while its weakest level was C$1.3982. It had hit its weakest level in more than 11 years on Dec. 18 at C$1.4003.
GBP/USD is supported in the range of 1.4886 and currently trading at 1.4946 levels. It reached session high at 1.4816 and hit low at 1.4664 levels. Pound slipped to a nine-month low against the dollar on Monday, as concerns increased that British economic growth would not be strong enough to justify an interest rate rise this year, and increased speculation over potential Brexist from Eurozone, weighed on the currency. On the first day of trading for 2016, the pound fell 0.4 percent to $1.4665, its lowest in 9-months, leaving it around 5 percent down in the last two months. Prime Minister David Cameron has promised a referendum on whether Britain should stay in the European Union by the end of 2017, but last month hinted it could come this year. Many market players are betting it will happen as soon as June, and with the outcome of the ballot unclear, that is likely to spell considerable uncertainty and, therefore, volatility.
Equities Recap
European shares fell sharply on Monday, the first trading day of 2016, as weak Chinese data weighed on world stock markets.
Britain's blue-chip FTSE 100 index declined 2.59 percent , France's benchmark CAC-40 index was down 2.66 percent, Germany's DAX ended down 4.46 percent ,Meanwhile the pan-European FTSEurofirst 300 index lost 2.78 percent.
U.S. stocks tumbled on Monday, putting the Dow on track for its worst start to a year since 1932 after weak Chinese economic data fanned fears of a global slowdown.
Dow Jones closed down by 1.57 percent, S&P 500 ended down by 1.52 percent, Nasdaq finished the day down by 2.10 percent.
Treasuries Recap
U.S. Treasury yields fell on Monday, with benchmark yields hitting nearly two-week lows after a tumble in Chinese shares fueled worries over global growth and drove demand for safe-haven U.S. government debt.
Benchmark 10-year Treasury notes were last up 10/32 in price to yield 2.239 percent, from a yield of 2.275 percent late Thursday.
U.S. 30-year Treasuries prices were last up 17/32 to yield 2.984 percent, from a yield of 3.013 percent late Thursday.
Two-year notes were up 2/32 to yield 1.032 percent, from a yield of 1.064 percent late Thursday.
Commodities Recap
Gold rallied 2 percent to a four-week high on Monday, buoyed by rising tensions in the Middle East and a sharp drop in stocks following weak Chinese data that fueled concerns over global growth.
Spot gold was up 1.4 percent at $1,074.80 an ounce at 2:09 p.m. EST (1909 GMT), after rising to a four-week high at $1,083.30, while U.S. gold futures for February delivery settled up 1.4 percent at $1,075.20 an ounce.
Spot gold is currently on track for its biggest one-day rise in a month.
Oil prices weakened on Monday in volatile trade, erasing an early rally as concern about Middle East tensions gave way to worries about slowing global economic growth and sliding stock markets.
Brent, settled down 6 cents, at $37.22 a barrel hit a session high of $38.99, its highest in nearly three weeks.
U.S. crude's West Texas Intermediate (WTI) finished down 28 cents at 36.76.it had traded as high as $38.39
