Market Roundup
• US ISM Manufacturing PMI Sep, 60.8, 58.0 forecast, 58.8 previous.
• US ISM Manufacturing Prices Paid Sep, 71.5, 64.0 forecast, 62.0 previous.
• US Markit Manufacturing PMI Final Sep, 53.1, 53.0 previous.
• US Construction Spending Aug, 0.5%, 0.4% forecast, -0.6% previous.
• US ISM Manufacturing Employment Idx Sep, 60.3, 58.0 forecast, 59.9 previous.
• US ISM Manufacturing New Orders Idx Sep, 64.6, 60.3 previous.
• CA Markit Manufacturing PMI SA Sep, 55.0, 54.6 previous.
• Fed's rate hikes causing low inflation, Kashkari says.
• Mexico factory activity rises to 16-month high in Sept.
Looking Ahead - Economic Data (GMT)
• 21:00 New Zealand NZIER Confidence Q3, 18% previous
• 21:00 New Zealand NZIER QSBO Capacity Q3, 92.1% previous
• 00:00 Australia HIA New Home Sales m/m Aug, -3.7% previous
• 00:30 Australia ANZ Internet and Newspaper Job ads Sep, 2.0% previous
• 01:30 Australia Building Approvals Aug, -0.5% forecast, -1.7% previous
• 01:30 Australia Private House Approvals Aug, 0.0% previous
• 01:30 Australia RBA Cash Rate Oct, 1.50% forecast, 1.50% previous
• 05:00 Japan Consumer Confidence Index Sep, 43.3 previous
Looking Ahead - Events, Other Releases (GMT)
• 12:30 Fed’s Powell speaks before a Reuters Conversation in Washington
Currency Summaries
EUR/USD is likely to find support at 1.1715 levels and currently trading at 1.1746 levels. The pair has made session high at 1.1761 and hit lows at 1.1729 levels. The euro declined against the dollar on Monday as the dollar gained after a manufacturing index rose to its highest level since 2004, boosting hawkish bets on the U.S. economy. The ISM U.S. manufacturing activity index rose to 60.8 in September, above economists' expectations of 58, while the prices paid index was also the highest since May 2011. The prospect of U.S. tax reform and the likelihood of a further interest rate hike in December also boosted the greenback. The White House on Wednesday unveiled a long-awaited Republican tax reform framework that calls for lower tax rates for businesses and individuals. U.S. President Donald Trump is also ramping up his search for a new chief for the U.S. central bank, meeting with former Federal Reserve Governor Kevin Warsh, who is seen as more hawkish than current Fed Chair Janet Yellen. The dollar was last up 0.56 percent against the euro at $1.1738 and up 0.15 percent against the yen at 112.64.
GBP/USD is supported in the range of 1.3242 levels and currently trading at 1.3276 levels. It reached session high at 1.3320 and dropped to session low at 1.3250 levels. Sterling declined to hit three-week low against the dollar on Monday as manufacturing surveys added to a string of recent data releases showing the British economy was struggling to gain momentum. Investors took profits after the pound posted its biggest monthly performance in two years in September as expectations increased that the Bank of England's rosy outlook on the economy was at odds with underlying data and as the governing Conservatives gathered for what could be a fraught party conference. Markets focused on Brexit negotiations after Britain's junior Brexit minister said he was hopeful that EU negotiators would agree to move on to discuss future relationships in October, even after the head of the European Commission said it would take "miracles" for that to happen. Sterling fell one percent to $1.3268 on Monday, its lowest since Sept. 14. September was the biggest monthly gain for the British currency since September 2015.
USD/CAD is supported at 1.2454 levels and is trading at 1.2508 levels. It has made session high at 1.2522 and lows at 1.2484 levels. The Canadian dollar declined against its U.S. counterpart on Monday as Canadian dollar weakened after a drop in the price of oil, one of Canada's major exports, and a broad rise for the greenback. Renewed prospects of U.S. tax cuts that could boost the economy lifted the U.S. dollar against a basket of major currencies on Monday. U.S. crude oil was down 2.63 percent at $50.31 a barrel as a rise in U.S. drilling and higher output from the Organization of the Petroleum Exporting Countries put the brakes on a rally that brought the biggest third-quarter price gain in 13 years. The Canadian dollar was trading at C$1.2505 to the greenback, or 79.97 U.S. cents, down 0.3 percent. The currency traded in a range of C$1.2466 to C$1.2524. It touched a four-week high at C$1.2531 on Friday, when data showing that Canada's economy stalled in July further dampened prospects of another interest rate hike by the central bank this month.
AUD/USD is supported around 0.7800 levels and currently trading at 0.7831 levels. It hit session high at 0.7840 and made session lows at 0.7807 levels. The Australian dollar edged lower on Monday against the dollar as upbeat U.S. factory data boosted greenback across the board. A measure of U.S. manufacturing activity surged to a near 13-1/2-year high in September as disruptions to the supply chains caused by hurricanes Harvey and Irma resulted in factories taking longer to deliver goods and boosted raw material prices. The dollar extended gains after the data. The currency has been rising after Fed Chair Janet Yellen's recent speech that suggested the chances of an interest rate hike in December remain high. Investors have also pinned hopes on President Donald Trump's tax reform plan, which envisages lowering corporate tax to 20 percent. The Australian dollar eased a touch to $0.7825, having now lost ground for three weeks in a row. Chart support was strong around $0.7800, but a break there would open the door to $0.7740. The Reserve Bank of Australia (RBA) holds its October policy meeting on Tuesday and is considered certain to keep rates at 1.5 percent for another month.
Equities Recap
Spanish stocks sank on Monday after violence surrounding Catalonia's independence referendum fuelled political worries and left Madrid's bourse missing out as European shares hit a three-months high and Wall Street fresh new records.
UK's benchmark FTSE 100 closed up by 0.8 percent, the pan-European FTSEurofirst 300 ended the day up by 0.41 percent, Germany's Dax ended up by 0.5 percent, France’s CAC finished the day up by 0.3 percent.
U.S. stocks started the fourth quarter on a strong note on Monday, with all three major indexes touching record highs as data pointed to underlying strength in the economy.
Dow Jones closed up by 0.68 percent, S&P 500 ended up 0.39 percent, Nasdaq finished the day up by 0.32 percent.
Treasuries Recap
U.S. Treasury yields rose on Monday in choppy trading, as Wall Street shares hit record highs and the dollar gained amid upbeat U.S. manufacturing and construction spending data that backed expectations of another rate increase before year end.
In late trading, the benchmark 10-year U.S. Treasury note yield was 2.333 percent, up slightly from 2.326 percent late on Friday, while the 30-year yield rose to 2.864 percent from 2.858 percent.
Commodities Recap
Gold fell to its lowest in nearly seven weeks on Monday as rising U.S. Treasury yields pushed the dollar higher while concern over violence during Catalonia's independence vote at the weekend weighed on the euro.
Spot gold was down 0.4 percent at $1,273.78 per ounce by 1:46 p.m. EDT (1746 GMT), after touching $1,270.60, the lowest in nearly seven weeks. U.S. gold futures for December delivery settled down $9, or 0.7 percent, at $1,275.80 per ounce.
Oil fell more than $1 a barrel to below $56 on Monday as a rise in U.S. drilling and higher OPEC output put the brakes on a rally that helped prices to register their biggest third-quarter gain in 13 years.
Brent crude, the global benchmark, was down $1.22 or 2.15 percent at $55.56 a barrel at 11:20 a.m. EDT (1630 GMT). It notched a third-quarter gain of about 20 percent, the biggest third-quarter increase since 2004 and traded as high as $59.49 last week.
U.S. crude was down $1.56 or 3 percent at $50.11. The U.S. benchmark posted its strongest quarterly gain since the second quarter of 2016.
