Market Roundup
- China seizes up to $157 bln of unspent local government budgets - sources.
- Pimco's Ivascyn says below 50 pct chance Fed hikes rates this week.
- Australia's Turnbull promises "thoroughly liberal" govt after ousting Abbott.
- Brazil readies 65 bln reais in new spending cuts, revenue, Central bank poll shows 2016 inflation, growth outlooks worsen.
- OPEC says signs of slowing U.S. production could reduce market imbalance in coming months.
- Canada posts budget surplus in 2014-15, earlier than expected.
- New UK Labour leader names "enemy of capitalism" as finance spokesman.
Looking Ahead - Economic Data (GMT)
- 22:45 New Zealand Q2 Current Account q/q forecast -1.5 bln v 0.66 bln
- 22:45 New Zealand Q2 Current Account annual forecast -8.8 bln v 8.6 bln
- 01:30 Australia Aug New Motor Vehicle Sales -1.3% previous
Looking Ahead - Events, Other Releases (GMT)
- BOJ Meeting - No change in policy expected - Y80trln annual Monetary Base Rise Target
Currency Summaries
EUR/USD is likely to find support at 1.1250levels and currently trading at 1.1315 levels. The pair has made session high at 1.1325 and hit lows at 1.1303 levels. Euro eased against Dollar on Monday, after growth in China's investment and factory output missed forecasts in August, reinforcing chances that third-quarter growth may dip below 7 percent the first time since the financial crisis. China's slowdown is likely to be a key worry for the Fed and a 14 percent drop in Chinese imports over the past year, the tenth straight monthly drop, along with an annual factory gate price deflation of almost 6 percent, does not help rate hike arguments. The Fed will kick off a two-day policy meeting on Wednesday. Though some in the market still reckon a "lift-off" could come this week, the view is gathering steam that faltering global growth could push that back even into next year. The euro fell 0.3 percent against the greenback by hitting session low at $1.1303 in the mid US session. To the upside, immediate resistance can be seen at 1.1325. To the downside, immediate support level is located at 1.1288 levels.
GBP/USD is supported in the range of 1.5380 levels and currently trading at 1.5425 levels. It reached session high at 1.5434 and dropped to session low at 1.5375 levels. Sterling edged away from a three-week high against the dollar on Monday, with investors unwilling to make major bets ahead of a week packed with UK economic data and the most closely watched U.S. Federal Reserve meeting in years. Whatever the Fed decides on Thursday it will also have implications for whether the Bank of England raises rates next year. The Bank of England's chief economist, Andy Haldane, gave markets nothing new to go on after policy readout last week that sent sterling sharply higher. British inflation, is expected to come in at zero on Tuesday, is the central argument against a move higher in UK rates, on which markets have blown hot and cold for the past two years. Countering that, jobs and wages numbers have been more positive. The pound fell by just over 0.1 percent to $1.5417, having dipped as low as $1.5373 in the US session. To the upside, immediate resistance can be seen at 1.5475. To the downside, immediate support level is located at 1.5428 levels.
USD/JPY is supported around 119.95 levels and currently trading at 120.04 levels. It peaked to hit session high at 120.22 and made session lows at 118.85 levels. The dollar slipped against Japanese yen on Monday, after more disappointing numbers from China added to worries about a slowdown in the world's second-biggest economy which raised Japanese yen's safe heaven bets . The dollar was down 0.4 percent against the yen at 120.04 yen dollar held close to a three-week low against a basket of major currencies on Monday in advance of this week's Federal Reserve meeting, as investors bet interest rates would be kept at their record lows until at least December. The Bank of Japan announces its rate decision on Tuesday and Governor Haruhiko Kuroda is expected to offer a bleaker view on overseas economies and may lower its assessment on the country's exports next week. To the upside, immediate resistance can be seen at 120.28. To the downside, immediate support level is located at 119.97 levels.
USD/CAD is supported at 1.3227 levels and is trading at 1.3256 levels. It has made session high at 1.3279 and lows at 1.3231 levels. The Canadian dollar was little changed against the greenback on Monday, trading within a narrow range as investors positioned themselves ahead of the U.S. Federal Reserve's interest rate decision later this week. The Fed had been indicating it planned to hike rates at some point this year, but recent worries about global growth and lackluster Chinese economic data have increasingly raised the possibility that it may delay a rate hike until 2016. The currency has traded narrowly between C$1.3225 and C$1.3268 during the US session. On the data front, Canadian home prices rose 1 percent in August from a month ago and were up 5.4 percent from a year earlier, according to the Teranet-National Bank Composite House Price Index. To the upside, immediate resistance can be seen at 1.3276. To the downside, immediate support level is located at 1.3243 levels.
Equities Recap
European equities ended lower on Monday as investors grew jittery ahead of the Federal Reserve meeting in which the U.S. central bank could take a decision to maintain or start raising interest rates after keeping them low for years.
UK's benchmark FTSE 100 closed down by 0.3 percent, the pan-European FTSEurofirst 300 ended the day down by 0.3 percent, Germany's Dax ended up by 0.4 percent, France's CAC finished the day down by 0.3 percent.
U.S. stocks closed lower on Monday as many investors put off making big bets ahead of the Federal Reserve's policy meeting this week and others worried about weak data from China.
Dow Jones closed down by 0.38 percent, S&P 500 ended down by 0.41 percent, Nasdaq finished the day down 0.36 percent.
Treasuries Recap
U.S. Treasuries prices were mostly flat on Monday on hesitation ahead of a two-day Federal Reserve policy meeting and on views that foreign central banks could continue selling U.S. government debt to strengthen their currencies.
U.S. 30-year Treasury bonds were last down 1/32 in price to yield 2.95 percent, from a yield of 2.94 percent late Friday. Benchmark 10-year Treasury notes were last up 2/32 in price to yield 2.17 percent, from a yield of 2.18 percent late Friday.
Two-year notes were last down 1/32 in price to yield 0.73 percent, from a yield of 0.71 percent late Friday.
Commodities Recap
Brent fell almost 4 percent on Monday, narrowing U.S. crude's discount against the global oil benchmark to the lowest since January after an industry report of a large supply draw and government data forecasting lower output in U.S. crude.
Brent settled down $1.77, or 3.7 percent, at $46.37 a barrel, the lowest settlement in two weeks.U.S. crude, also known as WTI, closed down 63 cents, or 1.4 percent, at $44.
Gold turned slightly higher on Monday, clawing above the prior session's one-month low on uncertainty ahead of a Federal Reserve policy meeting that will be scrutinized for clarity on when the U.S. central bank will raise interest rates.
Spot gold was up 0.1 percent at $1,109 an ounce by 3:15 p.m. EDT (1915 GMT). It had fallen to $1,098.35 on Friday, the lowest since Aug. 11.U.S. gold for December delivery settled up 0.4 percent at $1,107.70, but was also close to its lowest in a month.
