Market Roundup
• U.S. trade negotiators likely to visit China next week – SCMP
• ECB expected to give dovish signal on Thursday
* Fed expected to cut rates by 25 bps this month
• US June Chicago Fed National Activity -0.02, 0.10 forecast, -0.3% previous
• Canada May Wholesale Sales (MoM) -0.18%, 0.5% forecast, -0.16% previous
• Looking Ahead - Economic Data (GMT)
• 05:00 Japan BoJ Core CPI (YoY) 0.6 forecast, 0.7 previous
Looking Ahead - Events, Other Releases (GMT)
• 22:30 Australia RBA Assist Gov Kent Speaks
Currency Summaries
EUR/USD: The euro declined against the U.S. dollar on Monday, as foreign exchange investors were waiting to see by how much and how fast policymakers might ease policy, beginning with the European Central Bank on Thursday. Traders see about a 46% probability European policy-makers will lower a key deposit rate by 10 basis points to -0.50 basis points to combat risk from global trade tensions and anemic regional inflation. The euro was down 0.08 percent at $1.1210. An index that tracks the dollar versus a basket of six major currencies was up 0.22 at 97.28. Immediate resistance can be seen at 1.1228 (5 DMA), an upside break can trigger rise towards 1.1245 (50 DMA).On the downside, immediate support is seen at 1.1200 (Psychological level), a break below could take the pair towards 1.1158 (Lower Bollinger Bands).
GBP/USD: Britain's pound declined against the dollar on Monday, as British currency was weighed down ahead of the result of the Conservative party’s leadership election on Tuesday, which will decide Britain’s next prime minister. Market participants have been buying more options to protect against losses in sterling since early May and have consolidated their positions in the past few days, according to three-month sterling risk-reversals, which measure demand for buy and sell options on the British currency. The last votes to choose a new Conservative party leader are expected to be handed in on Monday, followed by an announcement on Tuesday. The pound was last down 0.19% at $1.2475, having declined 1.6% against the dollar so far this month.Immediate resistance can be seen at 1.2557 (21 DMA), an upside break can trigger rise towards 1.2626 (50 DMA).On the downside, immediate support is seen at 1.2456 (Daily Low), a break below could take the pair towards 1.2387(lower Bollinger Band).
USD/CAD: The Canadian dollar edged lower against its U.S. counterpart on Monday, retreating from a near nine-month high at the end of last week, as domestic data showed a surprise drop in May wholesale trade. Canadian wholesale trade decreased by 1.8% from April on weaker sales in the motor vehicle and motor vehicle parts and accessories subsector as well as the miscellaneous subsector. Analysts had forecast a 0.5% increase. It was the second domestic economic report in as many trading days that was weaker than expected. At (1936 GMT), the Canadian dollar was trading 0.41% lower at 1.3112 to the greenback. The currency, which on Friday notched its strongest intraday level since Oct. 25 at 1.3016, traded in a range of 1.3041 to 1.3095.Immediate resistance can be seen at 1.3100 (Psychological Level), an upside break can trigger rise towards 1.3154 (Higher Bollinger Bands).On the downside, immediate support is seen at 1.3071 (11 DMA), a break below could take the pair towards 1.3000 (Psychological level).
USD/JPY: The dollar was little changed against the Japanese yen on Monday, as investors tempered their expectations for deep U.S. interest rate cuts this month and heightened Middle East tensions supported safe-haven assets. Geopolitical fears were dominated by confrontation in the oil trade's most important waterway escalating, with footage showing the Iranian military defying a British warship when it seized a tanker in the Strait of Hormuz on Friday. On the policy front, markets generally expect central banks to either cut rates or keep settings accommodative, starting with the European Central Bank (ECB), which meets on Thursday followed by the Bank of Japan and then the Fed next week. Strong resistance can be seen at 108.07 (11 DMA), an upside break can trigger rise towards 108.54 (50 DMA).On the downside, immediate support is seen at 107.17 (Lower Bollinger Band), a break below could take the pair towards 107.00 (Psychological level).
Equities Recap
European shares ended flat on Monday as a summer lull hit trading volumes at the start of a pivotal week that will see the European Central Bank meet over monetary policy and a deluge of corporate earnings report.
The UK's benchmark FTSE 100 closed up by 0.08 percent, Germany's Dax ended up by 0.24 percent, and France’s CAC finished the up by 0.26 percent.
U.S. stocks rose on Monday, lifted by technology companies, as investors eyed fresh U.S.-China trade developments during a busy week of corporate earnings with results from marquee names including Facebook and Amazon on tap.
Dow Jones closed up by 0.06 percent, S&P 500 ended up 0.30 percent, Nasdaq finished the day up by 0.71 percent.
Treasuries Recap
U.S. Treasury yields fell on Monday and the yield curve flattened as dovish global central bank policy supported demand for government debt, with no major new events to set market direction.
Benchmark 10-year notes gained 3/32 in price to yield 2.04%, down from 2.05% late on Friday. The yield curve between two-year and 10-year notes flattened to 23 basis points, from 24 basis points on Friday.
Commodities Recap
Gold prices steadied on Monday, after a sharp fall in the previous session, as investors waited for the U.S. Federal Reserve’s decision on interest rates at its month-end meeting next week.
Spot gold was up 0.1% at $1,426.44 per ounce as of 1:44 p.m. EDT (1744 GMT). The metal touched its highest since May 2013 at $1,452.60 on Friday, but closed about 1.5% lower.U.S. gold futures settled mostly unchanged at $1,426.90.
Oil prices rose more than 1% on Monday, as investors worried about possible supply disruptions in the energy-rich Middle East after Iran’s seizure of a British tanker last week.
Brent crude futures climbed $1 a barrel, or 1.6% to 63.47 a barrel by 12:28 p.m. EDT (1728 GMT).West Texas Intermediate (WTI) crude futures were up 56 cents, or 1%, at $56.19 a barrel.
