Market Roundup
• US Aug new home sales fall 7.6% v -8.6% forecast, July revised higher; Sales decline in three of four regions.
• Dallas Fed Texas September manufacturing activity index -3.7 vs -6.20 in August.
• Fed’s Kaplan: would have been okay with a Sept rate hike; less worried about economy overheating, more worried about distortions from low rates.
• ECB's Draghi: Economic imbalances risk "destabilizing” EZ, low rates for a very long time have side effects.
• ECB’s Coeure: ECB far from even thinking about exiting accommodative.
• ECB's Coeure: QE less effective than hoped due to external shocks, EZ faces trap of low growth & low rates.
• Clinton and Trump to square off in highly anticipated debate, Monday Evening 9PM NYT (01:00 GMT).
• Deutsche Bank: no need for Berlin's help in USD14 billion US dispute (DB shares -7.5%, DAX -2.3%).
• Iran downplays chances of oil deal, says Algiers meeting only "advisory"; UAE keen on freeze.
• Yen gains after Kuroda sticks to negative rate script, 100 yen per dollar back in crosshairs.
Looking Ahead - Economic Data (GMT)
• No Significant Data
Looking Ahead - Events, Other Releases (GMT)
• 23:50 Japan- Bank of Japan to publish the minutes of its July policy meeting
Currency Summaries
EUR/USD is supported at 1.1195 levels and currently trading at 1.1256 levels. The pair has made session high at 1.1280 and hit lows at 1.1246 levels. Euro rose against the dollar on Monday as euro resumed its recent rally as the dollar stumbled ahead of the first debate between the two U.S. presidential candidates. The first face-off between Trump and Clinton will take place at 0100 GMT on Tuesday, with investors looking for clues about who will win the race to lead the world's biggest economy. Half of America's likely voters will rely on the presidential debates to help them make their choice between the two major U.S. party nominees in the Nov. 8 election, Looking to economic data, new U.S. single-family home sales posted their biggest decline in nearly a year in August after soaring to nine-year highs the month before, with analysts saying the trend in sales remains positive. The euro was last up 0.28 percent against the dollar at $1.1253 after hitting an 11-day high of $1.1280 earlier.
GBP/USD is supported in the range of 1.2907 levels and currently trading at 1.2972 levels. It reached session high at 1.2985 and dropped to session low at 1.2915 levels. Sterling declined against the U.S. dollar on Monday as lingering worries over the economic impact of Britain's impending exit from the European Union weighed on the currency. After hitting that low in July, sterling gained 5 percent versus the dollar by early September, as data showed the post-referendum economy was holding up better than had been feared. But with parliament back from its summer recess, Brexit worries have come back into investors' radar and have dampened appetite for the currency. The pound last traded close to a five-week low against the dollar at $1.2975, leaving it less than two cents away from the three-decade low below $1.28 it plumbed in the wake of June's Brexit vote.
USD/CAD is likely to find support at 1.3133 levels and is trading at 1.3238 levels. It has made intraday high at 1.3242 and lows at 1.3134 levels. The Canadian dollar weakened against US dollar on Monday as oil prices reversed course slightly after initially rising to higher levels and investors turned cautious ahead of the first U.S. presidential debate. Canada's annual inflation rate in August dipped to a 10-month low, and retail sales unexpectedly fell in July, reviving talk that the Bank of Canada was more inclined to ease monetary policy than tighten. U.S. crude prices were up 3 percent as the world's largest producers gathered in Algeria to discuss ways to support the market. European and Asian shares retreated, with investors focused on how U.S. Republican presidential candidate Donald Trump would fare in the debate against Democrat Hillary Clinton. The Canadian dollar was trading at C$1.3228 to the greenback, weaker than Friday's close of C$1.3171.
USD/JPY is supported around 100.03 levels and currently trading at 100.27 levels. It peaked to hit session high at 100.56 and made session lows at 100.24 levels. Japanese yen strengthened against US dollar on Monday after comments from a top Bank of Japan (BOJ) official reinforced views that the central bank was unable to weaken the yen, while an impending U.S. presidential debate stoked uncertainty. BOJ Governor Haruhiko Kuroda said Monday the central bank stood ready to use every possible policy tool to achieve its 2 percent inflation target. He also said no big increase or decrease to its bond buying was expected for now. The yen has gained more than 17 percent since the BOJ shocked markets in January by cutting rates below zero for the first time. The dollar was last down 0.5 percent against the yen at 100.30 yen after touching a session low of 100.34 yen.
Equities Recap
European shares fell on Monday, weighed down by major banking stocks, with Deutsche Bank hitting an all-time low amid concerns over the impact on its finances of a big U.S. fine.
UK's benchmark FTSE 100 closed down by 1.3 percent, the pan-European FTSEurofirst 300 ended the day down by 1.54 percent, Germany's Dax ended down by 2.3 percent, France’s CAC finished the day down by 1.8 percent.
Wall Street fell on Monday as investors hunkered down for the first U.S. presidential debate between candidates Hillary Clinton and Donald Trump.
Dow Jones closed down by 0.89 percent, S&P 500 ended down by 0.84percent, Nasdaq finished the day down by 0.89 percent.
Treasuries Recap
U.S. Treasury debt prices climbed on Monday as investors sought the safety of government bonds while global equities fell, led by financials on news on Deutsche Bank that dragged its shares to record lows.
U.S. benchmark 10-year Treasury notes were last up 7/32 in price, yielding 1.589 percent, down from 1.615 percent late on Friday. Earlier on Monday, yields fell to 1.574 percent, a three-week low.
U.S. 10-year yields briefly rose above 1.6 percent after data showed new U.S. single-family home sales fell less than expected in August even as prices declined and inventories rose.
U.S. 30-year bond prices rose 8/32 in price, yielding 2.325 percent, down from 2.339 percent on Friday. Yields earlier slid to a three-week low of 2.308 percent.
On the front end of the curve, U.S. two-year notes were flat in price for a yield of 0.741 percent, down from 0.754 percent late on Friday. Earlier, yields touched a two-week trough of 0.738 percent.
Commodities Recap
Gold steadied on Monday, after a retreat in the dollar helped it build on last week's gains but moves were muted with markets awaiting a U.S. presidential debate for pointers as to the outcome of November's election.
Spot gold was at $1,337.40 an ounce by 2:57 p.m. EDT (1857 GMT), up 0.01 percent, while U.S. gold futures for December delivery settled up 0.2 percent at $1,344.10 per ounce.
Oil settled up 3 percent on Monday as the world's largest producers gathered in Algeria to discuss ways to support prices, with nervous trade driving volatility to its highest since a similar meeting to freeze output in April in Doha which failed.
Brent crude futures settled up $1.46, or 3.2 percent, at $47.35 a barrel after trading between $45.74 and $47.66.
U.S. West Texas Intermediate (WTI) crude futures rose $1.45, or 3.3 percent, to settle at $45.93 after a session high of $46.20 and low of $44.43.
