Market Roundup
• US Dallas Fed Texas March manufacturing activity index 16.9 v 24.50 previous.
• Fed’s Evans: Inflation well on way to reach objective, doesn’t expect core inflation to reach 2% until 2019.
• BoE to check banks ready for disorderly Brexit, tells banks to brace for "range of outcomes" from Brexit.
• Britain's May meets Sturgeon after blocking new independence bid.
• ECB board members lay out diverging policy views, Lautenschlaeger looks to reduce accommodation.
• ECB’s Praet: argues for substantial stimulus, premature to talk about exit from easing program.
• ECB’s Weidmann: would like to see a slightly less expansive monetary policy, have to discuss issue of exiting expansive policy.
• S&P on ECB: ratings affirmed ‘AAA/A-1+’, expect the bank will successfully maintain price stability over med-to-longer term.
• Trumpflation setback sparks rush back into Eurozone bonds, German and French bond yields fall to 3-week lows.
• Gold hits 1-month high after Trump doubts knock dollar and shares.
Looking Ahead - Economic Data (GMT)
• No Significant Data
Looking Ahead - Events, Other Releases (GMT)
• No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.0822 levels and currently trading at 1.0864 levels. The pair has made session high at 1.0884 and hit lows at 1.0859 levels. Euro declined against the dollar in the US session on Monday as the dollar rebounded from earlier losses as investor demand for greenback improved as investors assessed how the defeat of President Donald Trump's first major legislative action would impact the rest of his agenda.Dollar declined earlier in European session as U.S. President Donald Trump failed to push through a healthcare reform bill. The collapse of the healthcare legislation has raised doubts about Trump's ability to deliver on other key campaign pledges such as tax cuts and massive infrastructure spending. The dollar was down 0.65 percent on the day against the basket of major currencies used to measure its broader strength. It fell as low as 98.858, the lowest since Nov. 11. The dollar index had risen to a 14-year high near 104.00 in early January when expectations for inflation-boosting stimulus under the Trump presidency were at their peak, with investors betting big on the so-called "Trumpflation" trade.
GBP/USD is supported in the range of 1.2552 levels and currently trading at 1.2562 levels. It reached session high at 1.2584 and dropped to session low at 1.2558 levels. Sterling dipped slightly against the dollar on Monday as dollar rebounded after its worst run since December as investors hoped U.S. President Donald Trump will be able to bolster the economy despite a defeat over healthcare reform. On Monday, investors reduced their holdings of greenback after the failure of a Republican healthcare bill weakened faith in U.S. President Donald Trump's other campaign promises. The pound gained 0.8 percent compared with Friday's close in New York, reaching as high as $1.2615, its highest since Feb. 2, before declining to trade at 1.2566 in the late US session. Sterling has been rising steadily since a Bank of England meeting on March 16 that saw a number of its members swinging towards concern over rising prices and its next move being a rise in interest rates to quell consumer inflation expectations. The dollar index had risen to a 14-year high near 104.00 in early January when expectations for inflation-boosting stimulus under the Trump presidency were at their peak. The index was down 0.42 percent at 99.212.
USD/CAD is supported at 1.3000 levels and is trading at 1.3079 levels. It has made session high at 1.3126 and lows at 1.3386 levels. The Canadian dollar edged higher against its U.S. counterpart on Monday as Canadian dollar strengthened as an uncertain outlook for U.S. fiscal stimulus weighed broadly on the greenback, offsetting lower prices for oil, one of Canada's major exports. The U.S. dollar tumbled as investors worried that U.S. President Donald Trump's defeat over healthcare reform foreshadowed difficulties delivering other key campaign promises, in particular tax cuts. Oil, meanwhile, resumed its slide as investors remained uncertain whether producing nations would extend an OPEC-led output cut beyond the end of June in an effort to reduce a global glut of crude. An uncertain U.S. policy outlook has contributed to a cautious stance from the Bank of Canada. As recently as January, the central bank said an interest rate cut remained on the table. It last cut in July 2015 to leave its policy rate at 0.50 percent. Bank of Canada Governor Stephen Poloz is likely to be asked about the recent better-than-expected economic performance in Canada when he speaks on Tuesday. But tame inflation data on Friday has indicated little pressure for a rate hike.
AUD/USD is supported around 0.7583 levels and currently trading at 0.7619 levels. It hit session high at 0.7626 and made session lows at 0.7612 levels. The Australian dollar stayed near three days low against the dollar on Monday as fall in oil prices and slightly stronger dollar across the board on increased optimism that Donald Trump will be able to bolster the economy despite a defeat over healthcare reform. The commodity-leveraged currencies had benefited in recent months on hopes U.S. President Donald Trump would quickly implement his pro-growth plan. But Trump's failure last week to get approval for his signature healthcare plan raised concerns over the future of his entire agenda. The market reacted by shifting to safe havens like gold and the yen, and away from risk trades and commodities. Copper was down around 1 percent, while Dalian iron ore futures shed another 5 percent after a steep slide last week. The Aussie fell to daily low at $0.7606 before recovering slightly to trade at 0.7615.
Equities Recap
European shares fell on Monday, hit by losses among miners and banks after U.S. President Donald Trump's failure to pass his healthcare bill raised worries over his ability to deliver on fiscal stimulus promises.
UK's benchmark FTSE 100 closed down by 0.6 percent, the pan-European FTSEurofirst 300 ended the day down by 0.43 percent, Germany's Dax ended up by 0.6 percent, France’s CAC finished the day down by 0.1 percent.
The S&P 500 cut earlier losses on Monday to end slightly lower, while the Dow declined for an eighth straight session, as investors assessed how the defeat of President Donald Trump's first major legislative action would impact the rest of his agenda.
Dow Jones closed down by 0. 22 percent, S&P 500 ended down 0. 0.10 percent, Nasdaq finished the day up by 0.20 percent.
Treasuries Recap
U.S. long-dated Treasury yields dropped to one-month lows on Monday, weighed down by growing doubts about the Trump administration's ability to deliver on its campaign promise to bolster the economy.
In late trading, benchmark 10-year note price gained 8/32 to yield 2.367 percent, down from Friday's 2.4 percent. Yields earlier fell to 2.348 percent, their weakest level in one month.
U.S. 30-year bond prices rose 15/32, yielding 2.976 percent. Earlier, yields slid to 2.96 percent, their lowest since Feb. 28.
Commodities Recap
Gold rallied more than 1 percent on Monday after U.S. President Donald Trump's failure to push through a healthcare reform package on Friday raised questions over his ability to deliver promised tax cuts and spending plans.
Spot gold was up 1 percent at $1,256.02 an ounce by 2:28 p.m. EDT (1828 GMT), having touched a one-month high of $1,261.03 and failing to hold above the 200-day moving average for the second time in a month. U.S. gold futures for April delivery settled up 0.6 percent at $1,255.70.
Oil resumed its slide on Monday as investors remained uncertain whether producing nations would extend an OPEC-led output cut beyond the end of June in an effort to reduce a global glut of crude.
Brent crude settled down 5 cents, or 0.1 percent, at $50.75 a barrel, and U.S. crude C settled down 24 cents, or 0.5 percent, at $47.73.
