Market Roundup
• US Employment Trends Jul 133.77, 132.42 previous.
• Fed won't need to raise interest rates in near term –Bullard.
• Bullard supports beginning to trim balance sheet soon, expects little impact on markets.
• Fed's Kashkari: Reducing immigration to US will slow economic growth.
• Investment funds buy $11.230 bln 2-year note in July - US Treasury.
• S.Korea, US agree to pressure N.Korea; China hopes for North-South talks.
• Moscow to cut dependence on US payment systems –RIA.
• China July FX reserves unexpectedly hit 9-month high on boost from weak dollar.
• German industrial output drops in June, up in Q2.
• StanChart CEO says Gulf rift puts Dubai finance hub at risk.
• S.Africa's unemployment steady at 14-year high, economy in "precarious" position.
• Zuma no-confidence vote to be secret, raising possibility he might lose.
Looking Ahead - Economic Data (GMT)
• 23:50 Japan Bank Lending YY Jul 3.3% previous
• 01:30 Australia a NAB Business Conditions Jul, 15 previous
• 01:30 Australia NAB Business Confidence Jul, 9 previous
• China Trade Balance USD Jul, 46.08b forecast, 42.77b previous
Looking Ahead - Events, Other Releases (GMT)
• No significant events
Currency Summaries
EUR/USD is likely to find support at 1.1756 levels and currently trading at 1.1790 levels. The pair has made session high at 1.1798 and hit lows at 1.1780 levels. Euro inched slightly higher against the dollar in the US session on Monday as the dollar eased slightly, but clung to most of its gains following Friday's robust U.S. jobs report, as investors await inflation data this week that may signal a turnaround in the currency's weakness this year. The dollar index, which tracks the greenback against six major rival currencies, was down 0.1 percent to 93.449.The index rose 0.76 percent on Friday as strong employment data bolstered the case for further monetary policy tightening by the U.S. Federal Reserve. The euro was up 0.19 percent against the dollar to $1.179. Despite Friday's boost, the dollar index is down 8.6 percent for the year. Investors will keenly peruse remarks from several Fed speakers this week, including St. Louis Fed President James Bullard and Minneapolis Fed chief Neel Kashkari, on Monday. U.S. producer prices for July is due on Thursday and consumer price index figures on Friday should confirm whether labor market strength is spilling over into inflation.
GBP/USD is supported in the range of 1.3000 levels and currently trading at 1.3029 levels. It reached session high at 1.3029 and dropped to session low at 1.3012 levels. Sterling dipped slightly against the dollar on Monday as view that Bank of England would keep interest rates at record lows for the coming months weighed on the British pound. Sterling had been supported in recent weeks by the view that the BoE would hike rates perhaps even by the end of this year after policymakers at the Bank made a series of hawkish comments. But despite BoE rate-setters last week trying to drive home the message that interest rates are likely to rise, the market chose to focus on their 6-2 vote to keep rates on hold, down from 5-3 in the last meeting, as well as downward revisions of growth and inflation forecasts. Sterling recorded its biggest daily falls against the dollar in more than six weeks on Friday, after a stronger-than-expected U.S. labour market report brought forward expectations for more interest rate hikes from the Federal Reserve. Sterling was down 0.1 percent at $1.3025 against the dollar, having pulled away from an 11-month high above $1.32 at the end of last week.
USD/CAD is supported at 1.2610 levels and is trading at 1.2680 levels. It has made session high at 1.2712 and lows at 1.2670 levels. The Canadian dollar edged slightly higher against its U.S. counterpart on Monday as Canadian dollar strengthened as investors awaited US inflation data this week that may signal a turnaround in the currency's weakness this year. The dollar index, which tracks the greenback against six major rival currencies, was down 0.01 percent to 93.44.The index rose 0.76 percent on Friday as strong employment data bolstered the case the further monetary policy tightening by the U.S. Federal Reserve. Oil prices fell, pressured over the past several days after last week climbing to their highest since May, as OPEC exports hit a record peak last month and output rose to 2017 high. However, they still held near nine-week highs, supported by robust U.S. jobs data last week and a slight fall in the U.S. drilling rig count. The market will now closely watch a two-day OPEC and non-OPEC technical committee meeting in Abu Dhabi for clues on how the global oil supply reduction pact is being fulfilled. The Canadian dollar was trading at C$1.2680 to the greenback, up 0.25 percent. The currency's strongest level of the session was C$1.2669, while it touched it lowest at C$1.2712.
NZD/USD is supported around 0.7332 levels and currently trading at 0.7357 levels. It hit session high at 0.7364 and made session lows at 0.7345 levels. The New Zealand dollar stayed near two-week lows against the dollar on Monday as the greenback finally found some favour from an upbeat U.S. jobs report. The New Zealand dollar slipped 0.3 percent to $0.7395, just above last week's trough of $0.7392 the lowest point since July 21.The kiwi is still up more than 10 percent in the past three months - a worry for the Reserve Bank of New Zealand (RBNZ) which is all but certain to leave cash rates at a record low 1.75 percent on Thursday. The RBNZ slashed rates three times last year by a total 75 basis points in an attempt to boost consumer prices. There are growing expectations the RBNZ will attempt to "jawbone" the currency following last month's news of slower-than-expected second quarter inflation. The antipodean currency soared since June on broad U.S. dollar weakness as a series of poor U.S. indicators added to uncertainty about the Federal Reserve's plan to start shrinking its balance sheet. But the dollar won a reprieve on Friday when nonfarm payrolls rose by a bigger-than-forecast 209,000 last month, while average hourly earnings increased 0.3 percent.
Equities Recap
Declines in shares of PostNL, Paddy Power Betfair and health companies outweighed strong basic resources and energy stocks on Monday, sending European shares down after robust gains in the previous session.
UK's benchmark FTSE 100 closed up by 0.3 percent, the pan-European FTSEurofirst 300 ended the day down by 0.14 percent, Germany's Dax ended down by 0.4 percent, France’s CAC finished the day flat.
The Dow Jones Industrial Average edged up on Monday to its ninth straight record closing high, while the S&P 500 ended up slightly with consumer and technology sector gains more than offsetting losses in energy.
Dow Jones closed up by 0. 11 percent, S&P 500 ended up 0. 0.15 percent, Nasdaq finished the day up by 0.49 percent.
Treasuries Recap
U.S. Treasury yields were flat to slightly lower in choppy trading on Monday after Friday's stronger-than-expected U.S. non-farm payrolls report, with no real influences ahead of government bond and corporate supply this week.
The U.S. 10-year yields slipped to 2.263 percent from 2.269 percent late on Friday. U.S. 30-year bonds yielded 2.844 percent, unchanged from the previous day. U.S. two-year yields were at 1.358 percent, little changed from Friday.
Commodities Recap
Gold prices were little changed on Monday, failing to gain support from a weaker dollar as investors digested sharp losses in the previous session and worried about further U.S. rate hikes.
Spot gold rose 0.1 percent at $1,259.20 an ounce by 1:51 p.m. EDT (1751 GMT), having on Friday touched its lowest in just under two weeks at $1,254 an ounce and registering its first weekly decline in four. U.S. gold futures for December delivery settled up 0.01 percent at $1,264.70.
Oil prices dipped on Monday as a rebound in production from Libya's largest oil field prompted selling, and investors worried about higher output from OPEC and the United States.
Global benchmark Brent crude futures ended the session down 5 cents, or 0.10 percent, at $52.37 a barrel at 2:05 p.m. EDT (1805 GMT) after trading as low as $51.37 a barrel.U.S. crude futures settled 19 cents, or 0.4 percent lower at $49.39 per barrel, after seeing a low of $48.54 a barrel.
