- USD/JPY hits 124.72 high in Europe, Gotobi demand overspill noted.
- Sterling holding soft, EUR/GBP hits 0.7197 high, tests resistance level.
- New low for Brent of 48.24, Iron ore soft at 366.50 (DCIO).
- Euro zone August Sentix Index 18.4 vs 18.5 previous, 20.2 expected.
- CFTC - Speculators boost net USD longs to highest since early June.
- China July trade surplus $43.03 bln, exports -8.3% y/y.
- SNB's Zurbruegg- CHF strongly overvalued, ready to intervene.
- BUBA'S Ulbrich- ECB should look through oil slump even as inflation falters.
- Germany's trade surplus to rise to a new record level in 2015.
- Greek government says it's discussing the draft of third bailout deal.
- Investors continue to pull out of emerging markets.
- (1000 ET/1400 GMT) US August employment trends index, July LMCI; last 129.1, +0.8.
- (1000 ET/1400 GMT) Labour Market Conditions Index July (previous +0.8).
Key Events Ahead
- (0900 ET/1300 GMT) FRB Atlanta's Lockhart welcome remarks at forum Atlanta.
- (1145 ET/1545 GMT) Fed Trade operation 30-year Ginnie Mae max $900mln.
- (1325 ET/1725 GMT) FRB Atlanta's Lockhart speaks at the Atlanta Press Club.
FX Recap
USD: The dollar stayed close to a nearly 4-month high against a basket of currencies on Monday, after steady U.S. jobs growth supported expectations that the U.S. Fed could raise rates in September. The dollar index rose to 97.639, after rising as high as 98.334 on Friday, the dollar rose to a 2-month high of 125.07 yen on Friday, and was last up about 0.2 percent at 124.47.
EUR/USD is supported above 1.0900 levels and currently trading at 1.0934 levels. It has made intraday high at 1.0979 and low at 1.0927 levels. The pair remains trading in a choppy mood at the beginning of the week, with gains appearing to be limited by recent tops in the 1.0980/85 band. Spot is losing upside momentum against a backdrop of scarce data releases in both Euro land and the US economy while market participants keep digesting the recent results from the US labour market. From the weekend, Greek Finance Minister Tsakalotos and Economy Minister Stathakis were holding discussions with the European Commission, IMF, ECB and the Euro zone's own bailout fund as they plan to strike a deal by August 20th to secure funds for an ECB repayment. Initial support is seen around at 1.0789 and resistance at 1.1195 levels.
USD/JPY is supported above 124.00 levels and posted a high of 124.78 levels. It has made intraday low at 124.12 and currently trading at 124.72 levels. On Friday markets got another sign that the first US rate hike is probably just around the corner, with job growth in the world's biggest economy pushing ahead last month. The unemployment rate held steady at 5.3%, its lowest since before the Global Financial Crisis. Data out of Japan on Monday showed the nation's broadest measure of trade, the current account, shrinking to a surplus of ¥558.6 billion in June from ¥1.88 trillion a month earlier. The sharply lower surplus in June was largely accounted for by the primary income surplus, which shrank from ¥2.01 trillion in May to just ¥656.9 billion in June. Initial resistance is seen at 125.68 and support is seen at 120.63 levels.
GBP/USD is supported below $1.5500 levels. It made an intraday high at 1.5507 and low at 1.5459 levels. Pair is currently trading at 1.5470 levels. Sterling is supported below $1.55 level after US NFP job data as well as BOE rate decision. BOE kept the interest rate and asset purchase facility unchanged as expected. Pair was sold-off on the back of BOE Broadbent's dovish comments relating to the central bank rate-hike outlook and also on widening UK trade deficit news. Moreover, BOE coming out surprisingly dovish with its minutes and revising lower its inflation outlook on Thursday also keep the negative sentiment around the pound intact. Initial support is seen at 1.5413 and resistance is seen around 1.5734 levels.
NZDUSD is supported below 0.6600 levels and trading at 0.6562 levels and made intraday low at 0.6557 and high at 0.6626 levels. The kiwi was seen dropping on Monday as the greenback was regaining lost positions after solid payroll numbers on Friday. The pair was 0.8% lower on the day, changing hands around $0.6570. As there is absolutely no macroeconomic news on the agenda today, traders might take a closer look at the speeches from the Federal Reserve's (Fed) Dennis Lockhart and Stanley Fischer. Initial support is seen at 0.6465 and resistance at 0.6789 levels.
USDCHF is supported above 0.9800 levels and currently trading at 0.9851 levels. Pair made in intraday high at 0.9854 and low at 0.9803. The Swiss currency was persistent sold-off versus the US dollar, pushing USD/CHF to fresh four-month highs beyond 0.98 handle, as markets continue to favour the US dollar after NFP job data. Swiss CPI figures which revealed that consumer prices in Switzerland failed to rebound in July and slid into negative territory on a monthly basis as well. Today no major data is expecting from the Switzerland. To the topside, the next resistance is located at 0.9850 levels and to the downside, immediate support might be located at 0.9769 levels and below that at 0.9700 levels.
AUD/USD is supported below 0.7400 levels and trading at 0.7360 levels. It has made intraday high at 0.7415 levels and low at 0.7353 levels. The Australian dollar slipped against its US namesake at the start of the new week, weighed down by lower commodity prices, particularly oil. Copper, gold, and silver futures also traded weaker on Monday, after the world's second-biggest economy and one of the world's biggest commodity importers, reported disappointing trade figures on Saturday. Over the weekend China also reported a mild 1.6% year-on-year rise in the CPI last month, and a 5.4% slump in the Producer Price Index (PPI) over the same period. Initial support is seen at 0.7225 and resistance at 0.7647 levels.
Equities Recap
China's stock markets bucked broad cautiousness in Asian equities with major indices up between 2 and 4 percent, while European trading got off to a subdued start as mining and energy stocks pulled the pan-European FTSEurofirst 300 equity index down 0.2 percent. UK's FTSE 100 Index was down 0.3 pct, EURO STOXX 50 INDEX rose 0.2 pct, France's CAC 40 climbed 0.6 pct and Germany's DAX edged higher 0.5 pct in early trades.
The MSCI All-Country World index was flat, while emerging-market equities were up 0.1 percent. Tokyo's Nikkei Average closed up 0.41 pct at 20,808.69. CHINA'S CSI300 Index ended up 4.5 pct at 4,084.36 points, while Shanghai Composite Index was down 4.9 pct at 3,928.42 points.
Commodities Recap
Crude oil futures touched multi-month lows on Monday after a weekend of mixed data from China showing higher oil imports in July but weaker trade figures overall, hurting sentiment across the commodities markets. Brent was down 19 cents at $48.42 a barrel at 0854 GMT, after touching $48.24 earlier in the session, the lowest in over six months. U.S. crude was down 18 cents at $43.69 after hitting an intraday low of $43.35 in Asian trading.
Gold ticked higher but stayed within striking distance of a 5-1/2-year low on Monday, after solid U.S. job gains in July suggested the Fed could raise interest rates as early as next month. Spot gold was up 0.3 percent at $1,096.10 an ounce by 0622 GMT, recovering from an early low of $1,089.40. U.S. gold for December delivery gained 0.2 percent to $1,096 an ounce.
Treasuries Recap
JGB prices ended the day steady to slightly higher, pushing yields down 0.5bp to 1.5bp on the day in the 7-yr and longer zone.
JGBs opened firmer on a continued fall in yields on German Bunds and US TSY bonds last Friday, sending yields down 1.5bp on the day in the above-mentioned zone. But JGBs trimmed part of their earlier gains after lunch, though results of today's JGB buying operations by the BoJ were largely in line with market expectations.
German 10-year yields inched slightly higher at 0.66 pct, Greek 2-year yields were down 43 bps at 20.69 percent with 10-year yields 12 bps lower at 11.77 percent. The 10-year yields have tumbled off highs around 19 percent hit in early July.
UK Gilts opened 4 ticks lower than the settlement of 117.59, as predicted as external core markets weighed on the open. Bounces from equities overnight and muted Greece optimism with regard to bail out negotiations have set the tone.
New Zealand government bond yields were 2 basis points lower. Australian government bond futures firmed as the yield curve flattened. The 3-year bond contract added 1 tick to 98.020, while the 10-year contract rose 7 ticks to 97.1900.
