Market Roundup
- Dollar rises on diverging Fed, ECB monthly policy, Comments by Fed’s Bullard, ECB’s Praet boost dollar.
- Fed’s Bullard: Powerful case to be made to raise US interest rates, chance of Oct rate hike.
- Fed’s Lockhart: YE market operations not a barrier to Dec hike, watching European experiment with negative rates.
- Traders expect first U.S. rate hike in 2016, Jan FF futures price 50% chance of hike (CME Fedwatch).
- ECB’s Nowotny: interest rates to stay low as long as growth is low, ECB has no particular CCY policy.
- ECB’s Praet underlines ECB readiness to boost money printing if needed.
- BOC’s Poloz: if we tried to offset CCY movements we would frustrate natural shifts in econ resources.
- US Existing Home Sales fall more than expected (Aug 5.31m, forecast- 5.51m, 5.58m-previous).
- Greece’s Tsipras says ‘first big battle’ is Greek debt relief.
- Mexico’s Central Bank holds rate at 3%, Sees inflation well anchored, ready to act if necessary.
- China’s Premier: no basis for further Yuan devaluation, aims to develop open, transparent capital markets.
- Brazil ’16 inflation forecast- 5.70 vs 5.64% previous week, ’16 GDP growth -0.8% vs -0.6% previous week (CB poll)
Looking Ahead – Economic Data (GMT)
- 01:30 Australia Home Price Index Q2 1.6%-previous
Looking Ahead – Events, Other Releases (GMT)
- No Significant Events
Currency SummariesEUR/USD is likely to find support at 1.1170 levels and currently trading at 1.1191 levels. The pair has made session high at 1.1212 and hit lows at 1.1180 levels. The U.S. dollar strengthened against euro on Monday, on the view that the U.S. Federal Reserve was still on track to hike rates this year while the European Central Bank may ease further. The European Central Bank’s chief economist, Peter Praet, reiterated the bank’s readiness to modify its trillion-euro bond-buying program should economic turbulence merit action, he said in an interview in a Swiss newspaper. Meanwhile, St. Louis Fed President James Bullard told told a tv channel on Monday there is a powerful case to be made”” for the Fed beginning to tighten policy after nearly seven years of rock-bottom borrowing costs. The EUR was last down 0.65 percent against the dollar at $1.12270. To the upside, immediate resistance can be seen at 1.1225. To the downside, immediate support level is located at 1.1770 levels.GBP/USD is supported in the range of 1.5453 levels and currently trading at 1.5505 levels. It reached session high at 1.5537 and dropped to session low at 1.5480 levels. Sterling slipped lower against dollar on Monday, after the U.S. Federal Reserve’s officials comments on rake hike kept traders on the edge. Most strategists reckon the Bank of England will wait to raise rates in Britain until the Fed moves, many think it will not be far behind. Last week, data showed British wages increasing at their fastest rate in over six years, keeping alive expectations that the BoE will tighten policy around the middle of next year, though inflation fell back to zero. Against the dollar, sterling was 0.2 percent lower at $1.5504, after posting its strongest fortnight since mid-June. To the upside, immediate resistance can be seen at 1.5532. To the downside, immediate support level is located at 1.5453 levelsUSD/JPY is supported around 120.20 levels and currently trading at 120.55 levels. It peaked to hit session high at 120.64 and made session lows at 120.22 levels.US dollar edged higher against Japanese yen on Monday, after top Federal Reserve officials suggesting a possible year-end rate increase. Three regional Fed presidents – James Bullard of St. Louis, Dennis Lockhart of Atlanta and John Williams of San Francisco – all made comments indicating a rate hike remains on the table. On the data front, U.S. home resales fell more than expected in August, a cautionary sign for the U.S. housing market which has recently looked on stronger footing. The National Association of Realtors said on Monday existing home sales dropped 4.8 percent to an annual rate of 5.31 million units. A string of strong reports on the U.S. housing market have supported the view that the U.S. economy is building up steam and closing in on the point when the Federal Reserve will hike interest rates to keep it from overheating. The greenback was up 0.38 percent against the Japanese yen at 120.430. To the upside, immediate resistance can be seen at 121.00. To the downside, immediate support level is located at 120.42 levels. USD/CAD is supported at 1.3225 levels and is trading at 1.3252 levels. It has made session high at 1.3263 and lows at 1.3231 levels. Canadian dollar slipped against US dollar on Monday, as the rate hike comments from US central Bankers kept the dollar in bullish tone. On the data front, the value of Canadian wholesale trade was unchanged in July as gains in sectors including machinery and motor vehicles were offset by declines in the food industry, data from Statistics Canada showed on Monday. The reading fell short of economists’ forecasts for a gain of 0.7 percent. June’s figures were unrevised at 1.3 percent. In volume terms, wholesale sales were down 0.4 percent in July. Meanwhile, Governor Stephen Poloz said, the fall in the Canadian dollar has been an important factor in helping the economy adjust to lower oil and commodity prices, and the Bank of Canada must not stand in the way. The currency has traded between C$1.3264 and C$1.3175 during the US session To the upside, immediate resistance can be seen at 1.3276. To the downside, immediate support level is located at 1.3243 levels.Equities RecapEuropean shares closed higher on Monday, buoyed by stronger healthcare, bank and chemical stocks, although a slump in carmaker Volkswagen held back the German market.UK’s benchmark FTSE 100 closed up by 0.27 percent, the pan-European FTSEurofirst 300 ended the day up by 1.12 percent, Germany’s Dax ended up by 0.57 percent, France’s CAC finished the day up by 1.25 percent.U.S. stocks climbed in late Monday afternoon trading, rebounding from losses late last week with from gains Apple and financial shares, but a drop in biotech shares limited the advance. Dow Jones closed up by 0.77 percent, S&P 500 ended up by 0.47 percent, Nasdaq finished the day up 0.06 percent.Treasuries RecapU.S. Treasuries prices declined on Monday after a veritable chorus of remarks by top Federal Reserve officials suggesting a possible year-end rate increase and an upcoming wave of new bond supply spurred traders to reduce holdings.The benchmark 10-year Treasuries notes were down 23/32 in price, yielding 2.214 percent, up 8 basis points from late on-year notes were down 2/32 in price for a yield of 0.714 percent, up nearly 4 basis points from Friday, while the 30-year bond was down 2 points in price to yield 3.035 percent, up over 10 basis points on the day.Commodities RecapOil prices rallied on Monday, with U.S crude surging more than 4 percent on signs of declining stockpiles, less drilling that could reduce future output and a jump in gasoline futures that boosted the overall petroleum complex.U.S. crude’s front-month settled up $2, or 4.5 percent, at $46.68 a barrel. The front-month in Brent finished up $1.45, or 3.1 percent, at $48.92.Gold retreated from the previous session’s near three-week high on Monday as strength in stocks and the dollar dampened a rally fueled by the Federal Reserve’s decision last week to keep U.S. interest rates on hold.Spot gold was down 0.5 percent at $1,132.80 an ounce at 3:06 p.m. EDT (1906 GMT), while U.S. gold futures for December delivery settled down 0.4 percent at $1,132.80 per ounce.
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