Market Roundup
• Oil rally helps lifts equities; Wall St at record, Oil hits 3-wk high on OPEC prospects.
• S&P sets intraday record, poised for closing record, USD slips but stays close to highest since 2003.
• Fed’s Fischer: fiscal policies that increase productivity could relieve Fed of being only game in town.
• Fed’s Fischer: Higher USD won’t stop us from doing what we should for domestic economy.
• Fed’s Fischer: not a lot of room to increase US deficit w/o adverse consequences.
• ECB’s Draghi: Market reaction to US election muted, market resilient, policy rates will rise when higher growth, inflation.
• ECB’s Draghi: Inflation return still relies on current level of monetary support (DJ).
• ECB’s Coeure: we are far from needing to buy stocks, never discussed.
• Canadian wholesale trade unexpectedly slumps in September, -1.2% v forecast +0.4%, 0.8% previous.
• Nasdaq hits record high as Wall St rises with oil prices; Oil +3.2%; USD drops for first time in 11 days.
• EZ turns to hedge funds to meet borrowing needs, Bankers warn trend could exacerbate market volatility.
• German growth to pick up significantly in Q4, lead by increase in Mfg –Bundesbank.
• British PM hints she may be open to transitional agreement with EU.
Looking Ahead - Economic Data (GMT)
• No Significant Data
Looking Ahead - Events, Other Releases (GMT)
• 07:45 Australia RBA Assistant Gov Kent speaks at the Australian Business Economists (ABE) Conference dinner.
Currency Summaries
EUR/USD is likely to find support at 1.0553 levels and currently trading at 1.0636 levels. The pair has made session high at 1.0640 and hit lows at 1.0588 levels. Euro rose higher against US dollar as the dollar declined. Euro was also supported by developments which showed political developments surrounding next year's German and French elections were easing. German Chancellor Angela Merkel's announced on Sunday that she would seek a fourth term, while not a surprise, is viewed as positive for the single euro zone currency. Merkel is seen as a defender of liberal democracy in the West as investors are worried that a wave of populism and anti-globalization sentiment is spreading across Europe and threatening the breakup of the euro zone. The euro climbed 0.4 to $1.0631 after touching its weakest levels since December 2015 on Friday.
GBP/USD is supported in the range of 1.2410 and currently trading at 1.2499 levels. It reached session high at 1.2510 and hit low at 1.2454 levels. Sterling jumped higher against the dollar on Monday, as the market processed Prime Minister Theresa May's latest hints on the possible shape of Britain's exit from the European Union. May pledged to address concerns that Britain could fall off a "cliff edge" into uncertain trading conditions when it leaves the bloc. Sterling marked its third consecutive week of gains against the euro on Friday. The steadier tone has come as a number of banks begin to argue that a 20 percent fall since last December may prove enough to balance out Britain's large current account deficit and much of the risk stemming from June's Brexit vote. The pound was up 0.9 percent on the day at $1.2457, having topped out at $1.2513.It gained 0.6 percent against the euro to 85.13, having briefly traded below 85 pence for the first time in nine weeks.
USD/CAD is supported at 1.3385 levels and is trading at 1.3413 levels. It has made session high at 1.3450 and lows at 1.3384 levels. The Canadian dollar strengthened against its U.S. counterpart on Monday as slightly weaker dollar across the board and a jump in oil prices helped commodity related Canadian dollar. Brent settled up 4.4 percent at $48.90 and U.S. crude settled 3.9 percent higher at $47.49 after touching their highest levels in about three weeks as the dollar weakened. Comments by Russian President Vladimir Putin that raised expectations major oil producing countries could reach a deal to limit output at a meeting next week also spurred the jump in oil prices. The Canadian dollar was trading at C$1.3416 to the greenback, stronger than Friday's close of C$1.3498. On the data front, The value of Canadian wholesale trade unexpectedly fell by 1.2 percent in September from August, Statistics Canada data showed. Analysts had predicted a 0.4 percent gain. Sales in volume terms sank by 1.5 percent.
USD/JPY is supported around 109.88 levels and currently trading at 110.60 levels. It has made session high at 111.34 and low at 110.45 levels. The dollar declined against Japanese yen on Monday after reports of an earthquake in Japan weighed on the dollar against the safe-haven yen and boosted the euro and other currencies. Late on Monday, the Japan Meteorological Agency said an earthquake with a preliminary magnitude of 7.3 hit northern Japan, and it issued tsunami advisories for much of the nation's northern Pacific coast. An earthquake in 2011 in Japan resulted in nearly a 7 percent appreciation of the yen for the first few days after the quake on the expectation of increased repatriation flows. In late trading, the dollar fell from six-month highs against the yen to trade 0.1 percent lower at 110.80 yen.
Equities Recap
European shares rose on Monday, helped by a rise in commodity prices as investors continued to buy cyclical stocks and sell defensives on bets that the U.S. presidential election result might revive inflation globally.
UK's benchmark FTSE 100 closed down 0.1 percent, the pan-European FTSEurofirst 300 ended the up down by 0.31 percent, Germany's Dax ended up 0.1 percent, France’s CAC finished the day up by 0.5 percent.
All three major U.S. stock indexes set record closing highs on Monday, extending their post-election rally as energy and other commodity-related shares gained and Facebook led a jump in technology.
Dow Jones closed down up 0.46 percent, S&P 500 ended down by 0.75 percent, Nasdaq finished the day down by 0.90 percent.
Treasuries Recap
U.S. Treasury prices gained on Monday as higher yields caused by the recent sell-off tempted some new buyers, though a new sale of two-year notes drew relatively weak demand from fund managers.
Benchmark 10-year note yields jumped as high as 2.36 percent on Friday, before retracing to 2.34 percent on Monday. The note yields had traded at around 1.80 percent before Trump’s surprise election.
Two-year note yields rose as high as 1.09 percent in secondary trading on Monday, the highest since Dec. 30, 2015. The yields have soared from 0.81 percent before Trump's victory.
Commodities Recap
Gold rebounded on Monday from 5-1/2 month lows as the dollar shed some of the hefty gains made the previous week on bets that U.S. President-elect Donald Trump's plans for fiscal stimulus would prove inflation.
Spot gold was up 0.3 percent at $1,212 an ounce by 2:59 p.m. EST (1959 GMT), while U.S. gold futures for December delivery settled up 0.09 percent at $1,209.80.
Oil prices surged 4 percent to a three-week high on Monday, bolstered by growing conviction that major oil producing countries would agree next week to limit output.
Brent crude futures settled at $48.90 a barrel, up $2.04, or 4.4 percent. U.S. West Texas Intermediate (WTI) gained 4 percent to settle at $47.49 a barrel, up $1.80, after climbing as high as $47.80.
