Market Roundup
- Great fall of China sinks world stocks, dollar.
- Return to funders roils USD; commodity, EM fx hammered, USD/COP soars 4%.
- S&P 500 cuts losses after early 5% fall, pre-market circuit breaker.
- U.S. rate futures rally, Barclays moves liftoff forecast to March 2016 from Sept 2015.
- U.S. inflation probably lower than reported, Fed study says.
- North and South Korea reach agreement to end current tensions-Yonhap.
- Brazil rules out selling USD reserves to damp fx volatility, repo an option-source.
- Merkel, Hollande confident China will find stability, White House urges more reform
Looking Ahead – Economic Data (GMT)
- 22:45 New Zealand Trade Balance July: 4.23 billion last
- 23:30 Australia The Conference Board Leading Economic Index
- 03:00 New Zealand RBNZ 2-yr Inflation Expectation, 1.85% last
Looking Ahead – Events, Other Releases (GMT)
- No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.1512 levels and currently trading at 1.1582 levels. The pair has made session high at 1.1714 and hit lows at 1.1514 levels. The dollar fell broadly on Friday, dropping to a two-month low against the euro, Ultra-low interest rates in the euro zone have influenced the investors to borrow in euros and then, purchase currencies that provide higher returns, typically commodity currencies such as the Australian and New Zealand dollars are preferred by investors to do these types of dealings. In early New York trading session, the euro jumped to $1.1711, its highest level since mid-January. It last stood at $1.1663, up 2.4 percent, on the day, with its sustained rise in the past few weeks likely to cause unease within the European Central Bank. Meanwhile, A radical leftist opposed to Greece’s new bailout deal won a presidential mandate on Monday to try to form a new government but immediately admitted he would fail, pointing towards a snap election. To the upside, immediate resistance can be seen at 1.1711. To the downside, immediate support level is located at 1.1509 levels.
GBP/USD is supported in the range of 1.5734 levels and currently trading at 1.5770 levels. It reached session high at 1.5803 and dropped to session low at 1.5723 levels. Sterling was firmer on Monday against the dollar, which fell broadly, as expectations the Federal Reserve optimism of raise rates next month has evaporated. Sterling rose 0.4 percent to $1.5774 in the mid New York session, after hitting high at 1.5803 the cable retreated back to test daily support level at 1.5739 levels recent UK economic data has sent mixed signals to the BoE. The housing market looks strong enough to warrant higher interest rates, some economists say, but the last retail sales figures were well short of economists’ expectations. Trade-weighted sterling hit a 7-year high of 94.80 as recently as last week, supported by comments this month from BoE governor Mark Carney that the decision to raise rates was likely to come into “sharper relief” at the turn of the year. To the upside, immediate resistance can be seen at 1.5725. To the downside, immediate support level is located at 1.5660 levels.
USD/JPY is supported around 118.47 levels and currently trading at 118.68 levels. It has hit session high at 122.03 and made session lows at 116.18 levels. The Japanese Yen continued to inch higher against dollar, on Monday, as Investors preferred safe heaven currencies over the US dollar as a result dollar was broadly sold off on Monday. The safe-haven Japanese yen jumped 1.3 percent to hit three-month high against the dollar on Monday, as a sell-off in riskier assets gathered pace on growing worries about a slowdown in the Chinese economy and global deflationary pressures. The dollar was also hurt by a pushback in expectations of when the Federal Reserve will raise interest rates. The dollar index, which measures the greenback’s performance against a basket of six major currencies fell 0.8 percent to its lowest in two months, as more investors priced out chances of a rate hike in September. To the upside, immediate resistance can be seen at 188.80. To the downside, immediate support level is located at 118.47 levels.
USD/CAD is supported at 1.3214 levels and is trading at 1.3270 levels. It has made session high at 1.3289 and lows at 1.3153 levels. The Canadian dollar sank against its U.S. counterpart on Monday, to its lowest level in 11 years, as crude prices fell 4 percent after Chinese stock markets took their biggest one-day hit since the financial crisis. A recent string of disappointing data out of China, including a survey on Friday that showed further deterioration in the country’s manufacturing activity, sparked expectations Beijing might take steps to sooth markets. Chinese stocks fell nearly 9 percent after no move was made. Worries that stalling growth in one of the world’s largest economies and commodities consumers will spur a global economic slowdown drove dramatic declines in global equities and commodities. The price of crude, a significant strength booster for Canadian dollar, fell as low as $38.59 a barrel, after having already suffered its longest weekly losing streak since 1986 last week, weakening the Canadian dollar further against most of currencies on Monday. To the upside, immediate resistance can be seen at 1.3290. To the downside, immediate support level is located at 1.3271 levels.
Equities Recap
European stock markets slumped on Monday, after massive selloffs of stocks around the world. European stock markets lost almost 500 billion Euros in its market capitalization. UK’s benchmark FTSE 100 closed down by 4.6 percent, the pan-European FTSEurofirst 300 ended the day down by 5.4 percent, Germany’s Dax ended down 5 percent, France’s CAC finished the day down by 5.6 percent.
U.S. stocks ended more than 3 percent lower on Monday, their fifth straight drop, in an highly volatile session.
Dow Jones closed down by 3.56 percent, S&P 500 ended down by 3.92 percent, Nasdaq finished the day down by 3.81 percent.
Treasuries Recap
U.S. Treasury debt prices rose on Monday, with benchmark yields falling to four-month lows, as investors worldwide scrambled for low-risk assets and dumped stocks and other risky investments on worries that China’s problems will hurt the global economy.
In this jittery climate, benchmark 10-year U.S. Treasury notes were up 12/32 in price, retreating from a rally of more than 1 point. The 10-year yield was last at 2.007 percent, down 5 basis points, after falling to a four-month trough of 1.905 percent earlier Monday.
The two-year note yield fell to a 6-1/2-week low as traders reduced their expectations of a September rate increase. It was last down 5 basis points at 0.576 percent.
In the futures market, the Sept 10-year T-note contract rose 13/32 at 129-3/32 on its heaviest one-day trading volume in three months.
Commodities Recap
Oil’s weeks-long slump accelerated sharply on Monday with prices tumbling more than 5 percent to fresh 6-1/2-year lows as a renewed dive in the Chinese equities market sent global financial markets into a tailspin.
Brent October crude fell $2.77, or 6.1 percent, to settle at $42.69 a barrel, after plunging to a contract low of $42.51, the lowest front-month price since March 2009.
U.S. October crude was down $2.21 or 5.5 percent at $38.24, the lowest since February 2009. U.S. crude, on pace for a 17 percent monthly loss, posted its eighth consecutive weekly loss on Friday, the longest weekly losing streak since 1986.
Gold turned lower on Monday, as the dollar pared losses, and U.S. shares and other commodity markets staged a comeback while the white precious metals fell on concerns about the Chinese economy.
Spot gold was down 0.7 percent at $1,152.45 an ounce, after rising to $1,167.50 an ounce. U.S. December gold futures settled down 0.5 percent at $1,153.60 an ounce.
The material has been provided by InstaForex Company – www.instaforex.com