Market Roundup
• Dallas Fed Texas November Manufacturing activity Index 10.2 v -1.50 previous.
• USD pauses after Trump rally, retreats from 14-year highs, Francois Fillon's election seen boosting euro.
• Sterling drifts lower, unmoved by Vlieghe message (holding rates steady).
• ECB’s Draghi: Euro zone recovery to continue thanks to ECB stimulus.
• ECB's Draghi: Italy debt sustainable, no room for complacency, in position to address bond scarcity.
• ECB’s Draghi: There have been encouraging steps on fiscal governance and banking sector.
• Italian referendum nerves push up euro implied volatility sharply, 1-wk now includes Dec 4 referendum.
• ESRB warns 8 countries over residential property market stress in med-term.
• OPEC makes last-ditch bid to save oil deal as tensions grow, Analysts see sharp drop in prices if no deal.
• Iran optimistic on OPEC deal after meeting Algerian minister, Libya won't take part in any OPEC cuts for 'foreseeable future.
Looking Ahead - Economic Data (GMT)
• 23:30 Japan All House hold Spending YY* Oct forecast -0.6%, -2.10%-previous
• 23:30 Japan All House hold Spending MM* Oct forecasts 0.1%, 2.80%- previous
• 23:30 Japan Jobs/Applicants Ratio Oct forecast 1.39, 1.38- previous
• 23:30 Japan Unemployment Rate Oct forecast 3%, 3.00%- previous
• 23:50 Japan Retail Sales YY Oct forecast -1.2%, -1.90%- previous
Looking Ahead - Events, Other Releases (GMT)
• No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.0556 levels and currently trading at 1.0596 levels. The pair has made session high at 1.0599 and hit lows at 1.0562 levels. The euro inched higher against the dollar on Monday as the euro was boosted by the election of Francois Fillon as the center-right candidate in next year's French presidential elections. Fillon, a former French prime minister, is favorite to become president, with a flash opinion poll suggesting he would easily beat far-right National Front leader Marine Le Pen in a second round run-off. Markets worry that Le Pen, who has promised a referendum on membership of the European Union if she wins, would threaten the future of the currency bloc. The euro initially climbed as much as 1.1 percent against the greenback to an 11-day high of $1.0686, but retreated from those gains in the US session, it was last up at 0.1 percent against the dollar at $1.0606. The shared currency was not far from a nearly one-year low against the dollar hit last week. Trump's victory in the Nov. 8 U.S. election initially saw a flight to safe-haven assets such as gold but the trend quickly reversed as the dollar surged on expectations of higher U.S. spending and interest rates.
GBP/USD is supported in the range of 1.2359 levels and currently trading at 1.2406 levels. It reached session high at 1.2433 and dropped to session low at 1.2386 levels. Sterling declined against the dollar on Monday as sterling was pressured after BoE’s Vlieghe said Bank of England should keep interest rates on hold due to uncertain outlook for Britain's economy as the country prepares to leave the European Union. Gertjan Vlieghe, who was one of the strongest advocates for Bank of England stimulus before and after June's Brexit vote, suggested the BoE would be in no hurry to either cut or raise rates. Vlieghe said upside or downside surprises in Britain's economy need not prompt automatic changes in monetary policy. But he said that the "tension" between pessimism about Britain's economic prospects in financial markets and the caution in businesses on the one hand and relative optimism in households on the other would not last. The pound slid half a percent against the dollar, briefly trading below $1.24 for the first time in two weeks before recovering to $1.2422. It traded at 85.22 pence per euro.
USD/CAD is supported at 1.3375 levels and is trading at 1.3408 levels. It has made session high at 1.3440 and lows at 1.3395 levels. The Canadian dollar strengthened against its U.S. counterpart on Monday as higher oil prices and slightly weaker dollar across the board supported oil correlated Canadian dollar. Bank of Canada Governor Stephen Poloz said Canadian economy has some pockets of weakness but it would take a significant disruption to the Bank of Canada's outlook on inflation for the bank to consider more stimulus. The market is underestimating the prospect of further interest rate cuts from the Bank of Canada, some economists said, as an uncertain outlook for NAFTA risks derailing an expected pickup in Canada's business spending. U.S. crude prices settled up $1.02 at $47.08 a barrel, recouping losses in a volatile session as the market reacted to the shaky prospect of the Organization of the Petroleum Exporting Countries being able to agree to output cuts. The Canadian dollar was last trading at C$1.3421 to the greenback, or 74.51 U.S. cents, stronger than Friday's close of C$1.3527, or 73.93 U.S. cents.
USD/JPY is supported around 111.34 levels and currently trading at 111.94 levels. It peaked to hit session high at 112.74 and made session lows at 111.92 levels. Japanese yen strengthened against US dollar on Monday as dollar surrendered some gains after rising relentlessly following Donald Trump's surprise victory in the U.S. presidential election. The greenback fell as much as 1.3 percent to 111.99 yen having soared more than 8 percent in the wake of Trump's victory to its highest levels in eight months against the safe-haven Japanese currency. The greenback had surged more than 4 percent against a basket of currencies in the wake of the election earlier this month, with investors expecting a Trump administration to bring an expansion of fiscal policy, boosting inflation and pushing up interest rates. Meanwhile, Traders are also awaiting Friday's U.S. November jobs report. Economists are expecting U.S. employers to have added 175,000 jobs.
Equities Recap
European shares fell on Monday, weighed down by a drop in banks which were led lower by Italian lenders which hit their lowest point since end-September on continued worries over a cash call at troubled lender Monte dei Paschi.
UK's benchmark FTSE 100 closed down by 0.7 percent, FTSEurofirst 300 ended the day down by 0.94 percent, Germany's Dax ended down by 1.2 percent, France’s CAC finished the day down by 1 percent.
U.S. stocks fell modestly on Monday, weighed down by declines in the financial and consumer discretionary sectors, as some investors booked profits on the heels of a record-setting week.
Dow Jones closed down by 0.26 percent, S&P 500 ended down 0.51 percent, Nasdaq finished the day down by 0.54 percent.
Treasuries Recap
U.S. Treasury yields fell on Monday from last week's highs on month-end buying and views that a selloff that followed the surprise U.S. presidential election victory of Donald Trump may have gone too far.
U.S. 10-year Treasuries were last up 14/32 in price to yield 2.3214percent, from a yield of 2.370 percent late Friday. Two-year notes were last up 1/32 in price to yield 1.1109 percent, from a yield of 1.135 percent late Friday.
Other maturities were also lower in yield, with 30-year yields last down three basis points from late Friday at 2.9851 percent and seven-year yields last down five basis points at 2.1371 percent.
Commodities Recap
Gold prices rose more than 1 percent on Monday, recovering from their lowest levels since February as the dollar and long-dated U.S. Treasury bond yields retreated from recent highs.
Spot gold was up 0.8 percent at $1,192.64 an ounce by 2:44 p.m. ET (1944 GMT), after climbing as high as $1,197.54 earlier in the session. Prices remained within sight of Friday's 9-1/2-month low of $1,171.21.
U.S. gold futures settled up 1.05 percent at $1,190.80 per ounce.
Oil prices gained more than 2 percent on Monday in volatile trading after falling as much as 2 percent, recouping losses as the market reacted to the shaky prospect of major producers being able to agree to output cuts.
U.S. West Texas Intermediate crude futures settled up $1.02, or 2.21 percent at $47.08 a barrel. Brent crude rose $1.00, or 2.12 percent, to $48.24 a barrel.
