- GBP/USD off Friday's 3 week high. Plays in between 1.5506/1.5568 levels.
- EUR/USD off 1.1330 tops, easing towards 1.1266 Asian base.
- Dollar firms, ECB and BOJ dovish bias underpins divergence trade.
- DXY nears 200 DMA, plays 95.039/95.307, up from Friday's 94.063 base.
- DAX down 0.6% to 9785, SSEC closes up 1.9% at 3156 points.
- Greek stocks down 0.5% but off their opening lows.
- ECB chief economist declares 'Readiness and decisiveness' to act.
- China says UK supports inclusion of Yuan in IMF's SDR basket.
- Greek debt relief talks at top of Tsipra agenda.
- Bos Gov- Normalization of monetary policy in U.S, U.K delayed by growth slowdown.
- BoS Gov- Catalan independence would mean automatic exit from euro, imply exit from EU.
- Germany August Producer prices -0.5% m/m, -1.7% y/y vs previous 0.0%/-1.3%. -0.3%/-1.5% expected.
- Switzerland total sight deposits at 464.949bln w/e Sept 18 vs previous 464.258bln.
- (1000 ET/1400 GMT) Existing Home Sales (Aug) mkt 5.515 mn SAAR, prev 5.590 mn SAAR.
Key Events Ahead
- (0945 ET/1345 GMT) ECB's Coeure speaks in Rome.
- (1145 ET/1545 GMT) Fed Trade operation 15-yr Fannie Mae / Freddie Mac (max $500 mn).
- (1300 ET/1700 GMT) FRB Atlanta's Lockhart speaks at Buckhead Rotary Club function; Atlanta.
- (1300 ET/1700 GMT) Federal Reserve Bank of Atlanta President Dennis Lockhart speaks before the Buckhead Rotary Club.
FX Recap
USD: The dollar recovered against the yen and euro as investors weighed if ECB and the BoJ may ease policy after the U.S. Fed delayed rate hikes. The dollar traded at 95.204 against a basket of six major currencies, well above Friday's low of 94.063, its lowest since Aug. 26. The dollar was up 0.1 pct higher at 120.10 yen, recovering from Friday's low of 119.045 yen.
EURUSD: The European currency has faded the earlier spike to the 1.1330 area vs. the greenback, with EUR/USD now returning to below 1.1300 levels. There are no scheduled releases in Euroland today, whereas Existing Home Sales and the speech by Atlanta Fed D.Lockhart will be in the limelight across the Atlantic. It made intraday high at 1.1329 and low at 1.1274. Initial support is seen around at 1.1015 and resistance at 1.1560 levels. Option expiries are at 1.1250 (222M), 1.1300 (322M), 1.1425 (331M).
USDJPY: The greenback continues to pick up pace on Monday, now lifting USD/JPY to test fresh session peaks around 120.38. Japanese markets were spared losses, with three-consecutive bank holidays taking place from Monday through Wednesday. Absent activity in the Japanese markets until Thursday, the main highlights today will be Existing Home Sales and the speech by Atlanta Fed Dennis Lockhart, following the Fed's decision to delay its rates lift-off last week. Pair made intraday high at 120.38 and low at 119.72 levels. Initial resistance is seen at 123.20 and support is seen at 118.42 levels. Option expiry is at 120.00 (250M).
GBPUSD: Sterling was flat at $1.5525 on Monday, having risen around 2.3 percent in the previous two weeks as investors pushed back their expectations of when the U.S. Fed will hike rates. It was also flat at 72.765 pence against the euro. Pound accelerated lower and trading above 1.5500 levels. It is currently trading at 1.5514 levels. It made intraday high at 1.5567 and low at $1.5505 levels. The greenback, in terms of the US Dollar Index, continues to extend its gains against its G10 peers at the beginning of the week, recovering further after last Friday's fresh multi-day troughs. Initial support is seen at 1.5185 and resistance is seen around 1.5725 levels.
NZDUSD: The New Zealand dollar was driven lower on Monday, with several second-tier indicators pointing to renewed weakness in the economy. A consumer confidence gauge fell to its lowest level in three years this quarter, while net migration moderated in August, adding to recent signs that the economic growth is continuing to slow, and weighing on the New Zealand dollar on Monday. Consumer views on the near-term outlook for the economy was the biggest contributor to the drop in sentiment this quarter, with a net -15% of people expecting good economic times for the year ahead, down from a net 4.8% last quarter. Further data released on Monday showed net migration slowing from 5,730 in July to 5,470 last month. Pair is supported above $0.6300 levels. Pair is currently trading at 0.6345 levels. It made intraday high at 0.6399 and low at 0.6337 levels. Initial support is seen at 0.6195 and resistance at 0.6511 levels.
AUDUSD: Pair accelerated to the downside and now mires near fresh session lows, having breached the key support at 0.7180 levels. Pair also remains pressured on the back of lower commodity prices while also tracking losses in its OZ neighbour. Looking ahead, markets look forward to key US economic data due for release later in the week for further direction on the AUD/USD pair. It made intraday high at 0.7197 and low at 0.7155 levels. Initial support is seen at 0.6908 and resistance at 0.7245 levels. Option expiry is at 0.7120 (335M).
Equities Recap
Global stocks dropped on Monday as the uncertainty created by last week's Fed's decisoin and continued concerns over China and emerging markets dampened sentiment.
Europe's FTSEurofirst 300 dropped 0.2 pct, U.K.'s FTSE and France's CAC fell 0.1 pct and Germany's DAX inched lower 0.8 pct.
Most of Asia's losses were incurred by 1.5-2 pct falls in Australia, Korea and Malaysia. Shanghai Composite index rose 1.9 pct and the CSI300 climbed1.75 pct.
Commodities Recap
Oil rose by more than 1 pct on Monday after data showed U.S. drilling slowed and a report said $1.5 trillion worth of planned production was uneconomic at current prices. Global benchmark Brent crude oil was up 60 cents at $48.07 a barrel by 0815 GMT. U.S. crude oil futures were trading at $45.38 per barrel, up 70 cents.
Gold was near to its highest level in nearly three weeks on Monday, boosted by safe-haven demand after the U.S. Fed's move last week to leave interest rates unchanged weighed on global equities. Spot gold was steady at $1,138.90 an ounce by 0640 GMT, after gaining 3 percent in the previous three sessions.
Treasuries Recap
U.K. Dec Gilts opened this morning at 118.30 almost unchanged compared to Friday's settle price of 118.29. There has been some selling to push yields around 3bp higher across the curve, although the 2s/10s curve is 0.25bp steeper, and Gilts are underperforming other European bond markets by 1-2bp.
German 10-year Bund yields were flat at 0.67 pct, having fallen more than 10 bps on Friday after the U.S. Fed prolonged the era of nearly-free money by keeping rates on hold, citing global risks. French yields were up 1 bps at 0.97 percent.
Greek 10-year bond yields opened flat at 8.26 pct, but 2-year bonds rallied, with yields down 25 bps at 10.54 pct.
New Zealand government bonds rose, sending yields around 2.5 bps lower along the curve. 2-year yields stood at 2.4 pct, having touched their lowest since 2013. Australian government bond futures had a firm tone, with the 3-year bond contract up one tick at 98.110. The 10-year contract added 4.5 ticks to 97.2400.
