Market Roundup
• NY Fed’s Empire state Manufacturing -4.21 vs 2.50 forecast, 0.55 previous.
• U.S. stocks hit record highs on oil rise, easing central bank outlook, Weak Chinese, Japanese data suggests global monetary easing to continue.
• Fed's Williams urges new (fiscal) policies to combat low interest rates, CB’s could target nominal GDP instead of inflation.
• Brazil has few options to limit BRL's surge, BCB not considering direct USD purchases.
• OPEC deal a tough task, as oil output freeze expectations rise, Saudi comments suggest Riyadh wants supply deal -OPEC sources; producers to meet Aug 26-28 in Algeria.
Looking Ahead - Economic Data (GMT)
• 23:30 Australia New Motor Vehicle Sales m/m Jul 3.1%-previous
Looking Ahead - Events, Other Releases (GMT)
• 20:30 New Zealand RBNZ Governor Wheeler Speaks in Tauranga (Not Public)
• 01:30 Australia RBA to release the minutes of its August monetary policy meeting
Currency Summaries
EUR/USD is likely to find support at 1.1151 levels and currently trading at 1.1184 levels. The pair has made session high at 1.1204 and hit lows at 1.1153 levels. US Dollar declined against the euro on Monday as recent soft U.S. economic data which came in far below expectations tempered expectations of a Federal Reserve would raise U.S. interest rates soon. The dollar, which has fallen in four of the last five trading sessions, declined against the euro, a trend that has been in place for much of this year, with investors generally underwhelmed by recent weak US economic data. The U.S. currency was 0.2 percent lower at 101.14 yen after losing 0.6 percent on Friday, when U.S. retail sales and producer prices came in weaker than expected. The euro was up 0.3 percent at $1.1190, having risen 0.2 percent on Friday. On Tuesday, the Labor Department is set to release consumer price data for July. The consensus forecast is for consumer inflation to be unchanged last month, down from 0.2 percent in June.
GBP/USD is supported in the range of 1.2840 levels and currently trading at 1.2878 levels. It reached session high at 1.2900 and hit low at 1.2865 levels. British pound declined gained against the dollar on Monday, as traders kept selling pressure on sterling ahead of this week's packed first round of hard national data on consumer and corporate reaction to June's vote for Britain to leave the European Union. The pound has been falling steadily since the Bank of England launched a new round of monetary easing 10 days ago. Yet that is a two-edged sword - on the one hand, it should spur buying of UK government bonds and on other it has driven market interest rates for holding sterling lower. The first official readings of retail sales, inflation and jobs and wage data to fully reflect the period since the referendum are all due this week. Retail sales, due on Friday, are forecast to rise 4.2 percent year on year, according to analysts expectation.
AUD/USD is supported around 0.7630 levels and currently trading at 0.7672 levels. It hit session high at 0.7692 and made session lows at 0.7657 levels. The Australian dollar edged higher against US dollar on Monday following a rise in oil prices and on growing doubts about Federal Reserve’s raising rates in the coming months. The Australian dollar was trading at $0.7675, having slipped 0.7 percent on Friday, though that was still not far from a 3-1/2 month high of $0.7765 hit last week. Meanwhile, investors will watch out for the Reserve Bank of Australia's (RBA) August meeting minutes on Tuesday for further clues about its monetary policy outlook. Earlier this month, the RBA slashed official cash rates by a quarter point to defend the economy against creeping deflation. The futures market is placing a 50-50 chance of another rate cut by Christmas. Wage data due on Wednesday and jobs numbers the day after will also shape market expectations.
USD/CAD is supported at 1.2880 levels and is trading at 1.2917 levels. It has made session high at 1.2937 and lows at 1.2900 levels. The Canadian dollar strengthened against its U.S. counterpart on Monday as last weeks weaker than expected U.S. economic data and higher oil prices weighted on the greenback. U.S. data on Friday that showed retail sales were unexpectedly flat in July tempered expectations of a Fed interest rate hike this year. Oil prices rose to their highest in nearly a month as speculation intensified about potential producer action to support prices in an oversupplied market. U.S. crude prices were up 2.9 percent at $48.35 a barrel. Minutes after the close, it extended gains, reaching $48.46, its highest since July 12. Brent has gained about 10 percent cumulatively in the past three sessions, its most in such a stretch since May. The Canadian dollar was last trading at C$1.2920 to the greenback, or 77.33 U.S. cents, stronger than Friday's close of C$1.2962, or 77.15 U.S. cents. The dollar was down 0.1 percent against a basket of currencies, while Wall Street stocks rose to record highs on expectations for continued monetary policy easing around the world.
Equities Recap
European stocks climbed to their highest level in seven weeks on Monday, supported by firmer healthcare stocks after Belgian pharmaceuticals group UCB won a favourable U.S. court ruling.
UK's benchmark FTSE 100 closed up by 0.5 percent, the pan-European FTSEurofirst 300 ended the day up by 0.10 percent, Germany's Dax ended up by 0.3 percent, France’s CAC finished the day p by 0.1 percent.
All three major U.S. stocks indexes ended at all-time highs on Monday, extending their record-setting climb of the past few weeks as a rally in oil lifted energy shares, while materials also gained.
Dow Jones closed up by 0.33 percent, S&P 500 ended up by 0.28 percent, Nasdaq finished the day up by 0.56 percent.
Treasuries Recap
U.S. Treasury prices fell on Monday, with benchmark yields rising from near two-week lows as hopes of more overseas central bank stimuli stoked demand for stocks and other risky assets, reducing demand for low-yielding government debt.
The benchmark 10-year Treasury notes were down 7/32 in price with a yield of 1.541 percent, up 2 basis points from late on Friday.
Commodities Recap
Gold rose on Monday as the dollar edged lower as expectations dwindled that the U.S. Federal Reserve will raise interest rate this year.
Spot gold up 0.4 percent at $1,340.49 an ounce by 2:19 p.m. EDT (1819 GMT). The metal rose as much as 1.3 percent after the data on Friday, before giving up gains. U.S. gold settled up 0.3 percent at $1,347.50.
Oil prices hit five-week highs on Monday, gaining 10 percent or more in a three-day rally as speculation intensified over potential producer action to support prices amid a crude glut.
Brent crude settled up $1.38, or 2.9 percent, at $48.35 a barrel. Minutes after the close, it extended gains, reaching $48.46, its highest since July 12.
U.S. West Texas Intermediate (WTI) crude rose $1.25, or 2.8 percent, to settle at $45.74 a barrel. It also rallied post-settlement to $45.87, its highest since July 21. WTI has gained 10 percent on the month.
