Market Roundup
• US existing home sales fall (-7.1% v -2.8% forecast in warning sign for housing market, Northeast -17.1%.
• EZ consumer confidence flash -9.7 vs forecast -8.3.
• Fed's Lockhart: rate hike possible at April meeting, remains attentive to direction of inflation expectations.
• Fed’s Williams: If not for global risks would raise rates sooner, faster; sees rate hikes soon given encouraging data .
• BOJ's Nakaso: Revenue growth has offset low rates for Japanese banks.
• Sterling hit by British political row, yen gives back some gains.
• European refinery output rises in Feb –Euroilstock.
Looking Ahead – Economic Data (GMT)
• 23:30 Japan Reuters Tankan DI *Mar 7- previous
• 00:30 Australia Home Price Index* Q4 forecast 0%, 2%-previous
• 02:00 Japan Nikkei Mfg PMI Flash Mar 50.1- previous
Looking Ahead – Events, Other Releases (GMT)
• 00:45 Australia RBA Asst Gov (Financial System) Malcolm Edey speaks at the ASIC Annual Forum
• 05:35 Australia RBA Governor Glenn Stevens speaks at the ASIC Annual Forum
Currency Summaries
EUR/USD is likely to find support at 1.1200 levels and currently trading at 1.1244 levels. The pair has made session high at 1.1275 and hit lows at 1.1228 levels. The pair was trading slightly in bullish trend during early hours of European session on Monday. However, it declined after the release of U.S. home resales. The National Association of Realtors said on Monday existing home sales dropped 7.1 percent to an annual rate of 5.08 million units, the lowest level since November. In the late hours of American session, Euro hit low of 1.1235 levels before pausing around 1.1240 levels. The dollar rose 0.28 percent to 95.352 against a basket of major currencies. The greenback had fallen in the three prior weeks, a decline of 3.1 percent. The rally was also prompted by the Fed reducing its rate hike outlook for the year and statements from Chair Janet Yellen that made note of potential risks to the global economy. In a week shortened to four days by the Good Friday holiday and light on U.S. economic data, dealers said the main focus was likely to be guidance from individual Federal Reserve policymakers.
GBP/USD is supported in the range of 1.4300 currently trading at 1.4379 levels. It reached session high at 1.4359 and hit low at 1.4052 levels. The cable slipped below 1.4400 levels as the pair was weighted down by political uncertainty that soured the outlook for a currency already reeling from weeks of turmoil over whether Britain will stay in the European Union. The cable in the afternoon American hours trimmed some losses suffered earlier and bounced back near 1.4400 levels, however the pair failed to advance above 1.4400 levels and slipped to trade around 1.4362 levels in the late New York session. The uncertainty drove sterling to 7-year lows in late February and traders said the stark division within the ruling party did not bode well for the pound. The cost of hedging against sharp swings in the pound around the time of the referendum rose, reflecting growing uncertainty. Sterling was down 0.7 percent at $1.4375, holding above last week's low of $1.4053 struck on Wednesday, when the government's 2016 budget trimmed growth and inflation forecasts.
USD/CAD is supported at 1.3034 levels and is trading at 1.3082 levels. It has made session high at 1.3082 and lows at 1.3029 levels. The Canadian dollar weakened against the greenback on Monday although losses were pared after crude oil prices turned higher, while domestic attention turned to Tuesday's federal budget. Oil prices recovered from early losses as the market digested news of a modest rise in U.S. drilling activity, though uncertainty lingered over the outcome of a meeting of the world's major exporters next month to discuss freezing output. The new Liberal government will introduce its first budget on Tuesday and is expected to run a C$29 billion ($22 billion) deficit in fiscal 2016-17. The currency's strongest level of the session was C$1.2995, while its weakest was C$1.3093. Canadian government bond prices were lower across the maturity curve in sympathy with U.S. Treasuries. The two-year price fell 2.5 Canadian cents to yield 0.554 percent and the benchmark 10-year was down 25 Canadian cents to yield 1.311 percent.
AUD/USD is supported around 0.7526 levels and currently trading at 0.7582 levels. It hit session high at 0.7600 and made session lows at 0.7565 levels. The Australian dollars declined against US dollar on Monday as hefty gains left the currency pair in overbought condition , while thin liquidity in today’s Asian market due to holiday in Japan further eroded the demand for Australian dollar. The Australian dollar fell to $0.7576, having dropped a cent from Friday when it touched $0.7681, a level not seen since July last year. Meanwhile, Federal Reserve officials in separate appearances sounded a hawkish tone, suggesting U.S. interest rate increases were a possibility at the central bank's upcoming meeting in April. Still, the Aussie is sitting on steep gains, having jumped 6 percent this month. If sustained, it would be the largest monthly rise since 2011. Support was found at $0.7552. Investors are awaiting a speech from RBA Governor Glenn Stevens on Tuesday, who may take the opportunity to jawbone the runaway Aussie.
Equities Recap
European shares closed lower on Monday, with weaker commodity stocks more than offsetting gains in Bayer and Telecom Italia.
Britain's blue-chip FTSE 100 index closed down by 0.08 percent, France's benchmark CAC-40 index closed down by 0.86 percent, Germany's DAX ended up 0.04 percent, meanwhile the pan-European Eurofirst 300 index was down by 0.33 percent.
Wall Street closed little changed on Monday as investors searched for fresh catalysts and showed concerns about fully-extended share prices after a five-week rally.
Dow Jones closed up by 0.12 percent, S&P 500 ended up by 0.10 percent, Nasdaq finished the day up by 0.27 percent.
Treasuries Recap
U.S. Treasury yields rose on Monday after two Federal Reserve officials gave bullish projections on inflation and as investors prepared for new corporate debt sales.
Benchmark 10-year notes were last down 13/32 in price to yield 1.92 percent, up from 1.87 percent on Friday.
Commodities Recap
Oil prices rose on Monday as data showed a drawdown at the Cushing, Oklahoma delivery hub for U.S. crude and ahead of front-month contract expiry in the U.S. crude futures.
Brent crude futures for May delivery, the front-month, settled up 34 cents, or 0.8 percent, at $41.54 a barrel. Brent has risen 53 percent from 12-year lows of $27.10 hit on Jan. 20.
U.S. crude's futures for April gained 47 cents, or 1.2 percent, to settle at $39.91, expiring as the front-month.
Gold fell on Monday, extending losses for a third day as the dollar arrested three weeks of falls, but the metal was underpinned by expectations that the ultra-low interest rate environment will persist.
Spot gold was down 0.9 percent at $1,244.50 an ounce at 3:43 p.m. ET (1943 GMT), while U.S. gold futures for April delivery settled down $10.10 an ounce at $1,244.20.
The material has been provided by InstaForex Company – www.instaforex.com