Market Roundup
- Fed’s Dudley nods to rate rise later this year, says Yellen’s health is fine.
- U.S. Aug consumer spending up more than forecast, pending home sales decline unexpectedly.
- U.S. economy on track to grow 1.8 pct in Q3-Atlanta Fed’s GDPNow.
- Mexico extends dollar auctions through end of Nov.
- Brazil president addresses domestic fiscal issues, corruption in UN speech.
- U.S. Congress begins advancing spending bill with deadline looming.
- Weak currencies boost exports; pain ahead for commodity exporters-IMF.
Looking Ahead – Economic Data (GMT)
- Japan 05:00 Sep Small Business Confidence expectation- 48.5 v 48.8
Looking Ahead – Events, Other Releases (GMT)
- No major events planned
Currency SummariesEUR/USD is likely to find support at 1.1200 levels and currently trading at 1.1230 levels. The pair has made session high at 1.1247 and hit lows at 1.1223 levels. The dollar slipped against the euro and on Monday after worries over slumping global stock prices pulled down by worrisome corporate profits in China and anxiety over potentially market-rattling economic data due this week from, the United States. On the data front, U.S. consumer spending grew briskly in August and a key measure of inflation firmed a bit, signs of strength in America’s domestic economy that could lead the Federal Reserve to tighten interest rates despite weakness abroad. The Commerce Department said on Monday consumer spending increased 0.4 percent after an upwardly revised 0.4 percent rise in July. Euro zone inflation and U.S. jobs data will offer clues to the health of major developed economies in the coming week while the malaise gripping emerging markets is expected to prompt India to cut interest rates. Wednesday’s flash reading of September’s annual euro zone inflation is expected at zero, although core inflation, which excludes volatile energy prices, is seen at 0.9 percent for a third consecutive month. To the upside, immediate resistance can be seen at 1.1290. To the downside, immediate support level is located at 1.1203 levels.GBP/USD is supported in the range of 1.5133 levels and currently trading at 1.5185 levels. It reached session high at 1.5240 and dropped to session low at 1.5158 levels. Sterling eased towards a 4-1/2-month low against the dollar on Monday, with the greenback boosted by comments from Federal Reserve policymaker William Dudley who said a U.S. rate hike this year was very much on the cards. Dudley, who heads the Federal Reserve of New York, said he was confident that weak global economic conditions and the strong U.S. dollar would not permanently hold down inflation. Sterling slipped to $1.5175, having traded well above $1.52 for much of the morning session in Europe. At current levels, it was not far from a low of $1.5136 hit on Friday, its weakest since early May. Back in the UK, BoE Governor Mark Carney is due to speak late on Tuesday and is likely to reiterate that interest rates are probably headed up, given a gradually tightening labour market and a pickup in wages. To the upside, immediate resistance can be seen at 1.5240. To the downside, immediate support level is located at 1.5140 levels.USD/JPY is supported around 119.40 levels and currently trading at 119.85 levels. It made session high at 119.92 and made session lows at 119.67 levels. The dollar eased on Monday as the yen rallied amid drooping global stock prices and anxiety over potentially market-rattling economic data due this week from China and the United States. The yen has been a traditional safe haven in the currency market, along with the Swiss franc , gaining during times of economic uncertainty or stress in financial markets. The dollar was off 0.30 percent against the franc. The dollar, which advanced broadly last week as U.S. Federal Reserve Chair Janet Yellen boosted expectations for U.S. interest rate hikes, was down 0.6 percent at 119.88 yen. The yen has gained nearly 4 percent against the dollar since China shocked global markets by devaluing its currency in early August. Thursday’s China Caixin Purchasing Managers’ Index (PMI), will be more closely watched than usual by currency traders, who reckon a sharply slowing Chinese economy could delay rate hikes by the Fed. To the upside, immediate resistance can be seen at 120.40. To the downside, immediate support level is located at 120.00 levels. USD/CAD is supported at 1.3303 levels and is trading at 1.3380 levels. It has made session high at 1.3386 and lows at 1.3328 levels. The Canadian dollar flirted with 11-year lows against its U.S. counterpart on Monday as volatile crude oil prices took a negative turn, at one point falling more than 2 percent on worries over weak global demand. The price of crude, a major Canadian export, has plunged by more than half in the last year, dragging the loonie along some 20 percent in that time. The loonie traded between C$1.3319 and C$1.3385 in the US session on Monday. Last week, it briefly touched C$1.3417, or 74.53 U.S. cents, its weakest level since June 2004. Potentially market-moving reports on tap this week include Canadian gross domestic product figures for July, due out on Wednesday, and U.S. labour data for September, on Friday. To the upside, immediate resistance can be seen at 1.3414. To the downside, immediate support level is located at 1.3374 levels.Equities RecapEuropean shares closed sharply lower on Monday, with miner Glencore seeing one third of its value wiped out by growing debt concerns and carmaker, which has been hit by an emissions data scandal, extending losses.The pan-European FTSEurofirst 300 index ended down 2.09 percent, UK’s benchmark FTSE 100 closed down by 2.32 percent, Germany’s Dax ended down by 2.03 percent, France’s CAC finished the day down by 2.67 percent.U.S. stocks finished sharply lower on Monday and were on track for their worst quarter in four years as investors worried about the health of China’s economy and its potential impact on a U.S. interest rate increase.Dow Jones settled ended down by 1.89 percent, S&P 500 ended down by 2.55 percent, Nasdaq finished the day down 3.04 percent.Treasuries RecapU.S. Treasuries prices gained on Monday as global equity prices fell amid concerns over sluggish economic growth in China and falling commodity prices, ahead of Friday’s highly anticipated employment report. Worries about global growth have reduced investor appetite for risk and increased demand for safe-haven bonds, even as U.S. data shows a still-strengthening economy.10-year Treasuries were up 20/32 in price to yield 2.096 percent, down from 2.164 percent late on 30-year bond was up 1-24/32 in price to yield 2.869 percent, its lowest in a month, on the day.Commodities RecapOil prices fell nearly 3 percent on Monday, pressured by tumbling equities on Wall Street and weak Chinese economic data, although an estimated drawdown in crude stocks at the key U.S. storage hub appeared to limit losses.Brent, the key indicator for global crude prices, settled down $1.26, or 2.6 percent, at $47.34 a barrel. The U.S. crude benchmark, West Texas Intermediate (WTI) settled down $1.27, or 2.8 percent, at $44.43.Gold had its worst session in 2-1/2 weeks on Monday, extending Friday’s losses ahead of a key U.S. jobs report later in the week that could boost bets the U.S. Federal Reserve will raise interest rates this year.Spot gold 1.5 percent to a session low of $1,127.70 an ounce, its biggest fall since Sept 9, and was trading down 1.1 percent at $1,132.53 by 2:15 p.m. EDT (1815 GMT).U.S. gold futures for December delivery settled down 1.2 percent at $1,131.70 per ounce.
The material has been provided by InstaForex Company – www.instaforex.com