Market Roundup
• Trump, Deputy Attorney General Rosenstein to meet on Thursday.
• China says U.S. trying to force it to submit on trade as new tariffs kick in.
• Trump says second summit with North Korea’s Kim will be announced 'pretty soon'.
• US Sep Dallas Fed Mfg Bus Index, 28.10, 30.90 previous.
• Additional IMF funding to Argentina 'close to reality'.
• Turkey's lira firms after Pompeo says he expects talks on U.S. pastor.
• "Vigorous" inflation recovery still needs low rates: ECB's Draghi.
• Rouhani warns U.S. on sanctions, does not rule out talks.
• U.S., EU still in ‘exploratory’ talks on trade – EU’s Malmstrom.
• CA Jul Wholesale Trade m/m, 1.5%, -0.8% previous.
Looking Ahead - Economic Data (GMT)
• No major economic data scheduled
Looking Ahead - Events, Other Releases (GMT)
• 24 Sep 23:50 Bank of Japan releases minutes of monetary policy meeting held on July 30 and 31 in Tokyo.
• 25 Sept N/A U.S. Federal Reserve's Federal Open Market Committee starts its two-day meeting on interest rates
• 25 Sep 5:35 Bank of Japan Governor Haruhiko Kuroda speaks at a meeting with business leaders in Osaka
• 25 Sep 8:10 ECB chief economist Peter Praet participates in FT Investment Management Summit “Rebalancing Return and Risk Amid Global Recovery” in London
• 25 Sept 9:00 Norway Central Bank Governor Oystein Olsen speaks at the Centre for Monetary Economics/BI Norwegian Business School in Oslo
• 25 Sep 12:00 ECB Board Member Benoit Coeure gives the opening remarks at the annual meeting of ECB's Money Market Contact Group in Frankfurt
• 25 Sep 16:30 Riksbank Deputy Governor Per Jansson visits SEB and discusses the economic situation and current monetary policy in London
Currency Summaries
EUR/USD is likely to find support at 1.1667 levels and currently trading at 1.1747 levels. The pair has made session high at 1.1813 and hit lows at 1.1748 levels. Euro rose against US dollar on Monday, after European Central Bank chief Mario Draghi said he sees a vigorous pickup in euro zone inflation, backing moves toward unwinding an ECB asset purchase program meant to stimulate the economy. The single currency has been on an uptrend the last few weeks, bolstered by generally solid European economic data. Over the last 10 days, the euro has risen 2.5 percent versus the greenback. With the Fed decision a few days away, markets were jolted by Draghi's hawkish comments on inflation and wage growth even though he affirmed the ECB's pledge to keep rates at their current, rock-bottom level "through the summer" of next year. The euro was last trading at $1.1747 against the dollar. It rose to as high as $1.1815, a 3-1/2-month peak. The euro earlier was also boosted after German Chancellor Angela Merkel's coalition government resolved a dispute over the country's scandal-tainted spy chief on Sunday, ending a threat to the six-month-old administration. With the market forecasting a rate hike this week, another in December and two more next year roughly in line with Fed policymakers' projections, only unexpectedly strong data would change those bets.
GBP/USD is supported in the range of 1.3051 levels and currently trading at 1.3116 levels. It reached session high at 1.3168 and dropped to session low at 1.3100 levels. Sterling bounced against the dollar on Monday, rising above $1.31 after a big selloff the previous session, but investors said upbeat comments from Britain's Brexit minister about a possible deal with the EU would not support the currency for long. Sterling tumbled two cents against the dollar on Friday, its biggest daily drop this year, after Prime Minister Theresa May said Brexit talks had reached an impasse. Brexit minister Dominic Raab said he was confident Britain would eventually clinch a deal with the European Union. But those comments were unlikely to support the currency for long, analysts said, with May's leadership under increasing pressure ahead of her Conservatives' annual conference this week. Friday's selloff was a brutal reminder for investors of the currency's vulnerability to Brexit headlines. The pound fell to as low as $1.3053 and month implied volatility a measure of expected price swings jumped to its highest since February, in its biggest daily rise since January. Britain's opposition Labour Party will vote this week on whether to keep a second Brexit referendum as an option if Theresa May fails to get her plan for quitting the EU through parliament. That places further pressure on May though it is unclear what impact the prospect of a second referendum would have on sterling.
USD/CAD is supported at 1.2883 levels and is trading at 1.2953 levels. It has made session high at 1.2953 and lows at 1.2905 levels. The Canadian dollar edged lower against its U.S. counterpart on Monday despite higher oil prices and weaker dollar as renewed concerns about the risk of a global trade war weighed on Canadian dollar. Canadian wholesale trade rose 1.5 percent in July from June, a bigger increase than the 0.5 percent gain expected by analysts, data from Statistics Canada showed. Sales volumes rose 1.2 percent, which could help boost gross domestic product for the month. Data for July gross domestic product is due on Friday. The price of oil, one of Canada's major exports, climbed after Saudi Arabia and Russia ruled out any immediate increase in production despite calls by U.S. President Donald Trump for action to raise global supply. U.S. crude prices were up 1.9 percent at $72.14 a barrel. The U.S. dollar fell against a basket of other currencies ahead of a widely expected interest rate hike by the U.S. Federal Reserve this week. The Canadian dollar was trading 0.2 percent lower at 1.2944 to the greenback. The currency, which has strengthened by 1.9 percent over the last two weeks, traded in a range of 1.2909 to 1.2953.
USD/JPY is supported around 112.00 levels and currently trading at 112.73 levels. It peaked to hit session high at 112.52 and made session lows at 112.42 levels. The dollar gained against the Japanese yen on Monday amid concerns over the potential wider impact of a trade spat between China and the United States, while oil prices rallied to a four-year high after OPEC ignored U.S. calls to raise supply. The White House said President Donald Trump and Rosenstein are scheduled to meet on Thursday to discuss Rosenstein's future. The White House announced the meeting after a flurry of conflicting media reports on whether Rosenstein had resigned. The New York Times last week reported that Rosenstein had suggested secretly recording Trump in 2017 and recruiting Cabinet members to invoke a constitutional amendment to remove him from office. China and the United States, the world's two biggest economies, implemented with fresh tariffs on each other's goods on Monday, showing no signs of backing down from an increasingly bitter trade dispute that is expected to knock back global economic growth. Investors await details from the Federal Reserve meeting concluding on Wednesday, when the U.S. central bank is expected to raise benchmark interest rates and shed light on the path for future rate hikes. The dollar was up 0.1 percent against the yen at 112.77 yen ahead of this week's Fed meeting.
Equities Recap
The U.S.-China trade war dented European stocks on Monday after tariffs from the world's biggest economies came into force and China cancelled planned talks, triggering new fears of a protracted, costly trade dispute.
The UK's benchmark FTSE 100 closed down by 0.35 percent, FTSEurofirst 300 ended the day down by 0.52 percent, Germany's Dax ended down by 0.60 percent, and France’s CAC finished the down by 0.40 percent.
The S&P 500 and the Dow closed lower on Monday after a new round of U.S.-China trade tariffs kicked in, dampening last week's hopes for talks between the two countries, and as investors awaited a widely expected interest rate hike by the Federal Reserve.
Dow Jones closed down by 0.68 percent, S&P 500 ended down 0.35 percent, Nasdaq finished the day up by 0.09 percent.
Treasuries Recap
U.S. Treasury yields across maturities were steady on Monday afternoon having mostly recovered from early losses on a flurry of conflicting reports about whether Deputy Attorney General Rod Rosenstein, who is overseeing a Justice Department probe into Russia's role in the 2016 election, would leave his post.
The benchmark government bond was last at 3.078 percent, more than a basis point higher than the session low hit following the Axios report. It remained around 2 basis points below its open, however.
Commodities Recap
Gold was barely changed on Monday after the dollar dropped following remarks by the head of the European Central Bank then later pared losses, although activity was muted ahead of a U.S. central bank meeting this week.
Spot gold increased 0.04 percent at $1,199.57 per ounce by 1:44PM EDT (1744 GMT), giving up earlier gains.
U.S. gold futures December delivery settled up $3.10, or 0.3 percent, at $1,204.40 per ounce. Liquidity was thin during Asian trading hours on Monday as markets in Japan and China were closed for a holiday.
Global Benchmark Brent crude jumped more than 3 percent on Monday to a four-year high above $80 a barrel after Saudi Arabia and Russia ruled out any immediate increase in production despite calls by U.S. President Donald Trump for action to raise global supply.
Brent crude settled up $2.40 or 3.1 percent at $81.20 a barrel, after touching an intraday high of $81.39, the highest since November, 2014. U.S. light crude settled up $1.30, or 1.8 percent, higher at $72.08.
