- France August current account surplus EUR200mln vs deficit of EUR400 mln previous.
- PBOC Deputy Gov – China’s Stock Market Correction “Almost Over”.
- Glencore to sell copper mines in Australia and Chile.
- IMF D/MD – Japan Should Proceed With 2nd Sales Tax Hike Scheduled April ’17.
- IMF D/MD – Both Positives and Negatives to Weak Yen.
- IMF – Important To Avoid Excess Volatility.
- Fed’s Fischer – Econ continues growing but with considerable uncertainty.
- Fischer – Shifting expectations about Fed’s policy could be a source of volatility.
- Fischer – Does not anticipate recent events to have a significant effect on policy.
- (0900 ET/1300 GMT) Mexican Industrial output.
Key Events Ahead
- Japan markets were closed for Health-Sports Day and US markets will remain closed on Monday for Columbus Day.
- (0810 ET/1210 GMT) US Fed’s Lockhart speaks.
- (1030 ET/1430 GMT) US Fed’s Evans speaks.
- (1630 ET/2030 GMT) US Fed’s Brainard speaks.
FX Recap
USD: The dollar was near a 3-week low versus a basket of major currencies driven by the doubts over the possible rise in U.S. interest rates this year. The dollar index was down 0.1 percent on the day at 94.73, still close to Friday’s low of 94.692, its weakest level since Sept. 18. The dollar edged down against the yen to 120.14 yen and was 0.1 percent lower against the euro at $1.1370.EUR/USD: The European currency is up for the third consecutive session after having taken out key falling trend line resistance levels on last Friday. The broad based USD weakness on account of falling Fed rate hike bets and moderate weakness in the European equities today helped the single currency gain strength. The ECB’s Coeure was on the wires stating that it is too early to decide on more QE. His comments have yet to have an impact on the pair. Ahead in the day, speech from Fed officials could influence the pair. It made intraday high at 1.1395 and low at 1.134 levels. Initial support is seen around at 1.1015 and resistance at 1.1560 levels. Option expiries are at 1.1200 (278M), 112.30 (200M), 112.50 (200M).USD/JPY: The Japanese yen remained in a tight range on Monday, as volumes are limited due to bank holidays in the US and Japan. The US economy will be in focus this week with key data and several Fed policymakers delivering speeches. Pair made intraday high at 120.25 and low at 120.08 levels. Initial resistance is seen at 123.20 and support is seen at 118.42 levels. Option expiries are at 119.00 (600M), 120.25 (200M), 120.85 (230M), 121.00 (380M).
GBP/USD: Sterling rose 0.35 percent at $1.5361, towards a recent 2-week high against the struggling dollar, as investors cut bets in favour of the greenback on growing confidence that the Fed will not raise interest rates anytime soon. The euro was down 0.1 pct at 74.05. Pair remained at the higher range around $1.5350 level, keeping some of the early morning gains amid concerns around the timing of the Federal Reserve (Fed) rate hike. Pair made intraday high at 1.5365 and low at 1.5304 levels. Initial support is seen at 1.5107 and resistance is seen around 1.5725 levels.NZD/USD: The New Zealand dollar remained stronger on Monday and supported above $0.6700 levels. Cheaper fuel prices, past strength in the New Zealand dollar, and now renewed strength in the currency all paint a soft picture for New Zealand’s inflation outlook, putting greater pressure on the central bank to do more to achieve its target. Pair made intraday high at 0.6737 and low at 0.6671 levels. Initial support is seen at 0.6235 and resistance at 0.6721 levels. Option expiry is at 0.6565 (348M).AUD/USD: The Australian dollar is on an upward trajectory over the past week, taking advantage of the US dollar’s weakness in a week that saw central banks dominate market focus. The Australian currency was trading at a seven-week high at the end of the week following the dovish Federal Open Market Committee (FOMC) minutes from the meeting that took place in September 16 – 17. Looking towards the North American session, Fed officials’ Lockhart and Evans are scheduled to deliver speeches at their respective events. Pair made intraday high at 0.7367 levels and low around 0.7304 levels. Initial support is seen at 0.6908 and resistance at 0.7438 levels. Option expiries are at 0.7300 (333M), 0.7335 (250M).
Equities Recap
Shares were trading higher with a strong start to the week in Europe and Asia on Monday. China was again in focus as mainland shares jumped over 3 percent to seven-week highs. The pan-European FTSEurofirst 300 stock index rose 0.3 percent, Germany’s DAX added 0.8 percent, and Spain’s IBEX up 0.2 pct in early trades.Japanese markets were closed for a holiday. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.8 percent, extending an impressive 11 percent rise this month, China’s CSI 300 index rose 3.2 percent, while the Shanghai Composite Index added 3.3 percent.
Treasuries Recap
UK Gilts opened just 3 ticks higher than the settlement of 118.25, as predicted, as core markets adopted a cautious tone due to the Tokyo and US holidays today.German 10-year bund yields were virtually flat at 0.62 percent. Over the past three weeks yields have been trapped in a roughly 0.50-0.65 percent range.New Zealand government bonds were mostly steady, though 10-year yields reached their highest in three months at 3.48 percent. Australian government bond futures eased to two-week lows, with the three-year bond contract off 2 ticks at 98.120. The 10-year contract shed one tick to 97.2550.
Commodities Recap
Oil prices rose on Monday after Kuwait’s oil minister said economic growth and the removal of high-cost producers would help tighten global fuel balances. Global benchmark Brent crude oil rose 50 cents a barrel to $53.15 by 0800 GMT. U.S. light crude was up 45 cents at $50.08.
Gold climbed to 7-week highs as expectations that the US Fed will delay an expected rate hike beyond year-end pressured the dollar to three-week lows against a currency basket. Spot gold reached a peak of $1,166.60 an ounce and was up 0.7 percent at $1,164.60 an ounce at 0925 GMT, while U.S. gold futures for December delivery were up $8.70 an ounce at $1,164.60.
The material has been provided by InstaForex Company – www.instaforex.com