Market Roundup
• Trump urges lawmakers to end health mandate, cut top tax rate.
• U.S. court lets Trump travel ban go partially into effect.
• IMF says Europe's growth more durable, warns of 'disruptive' Brexit threat.
• Weaker than ever, May faces test in UK parliament over Brexit plans.
• BOJ's Kuroda expects to hit inflation goal in fiscal 2019.
• BOJ to persist with monetary easing to boost inflation – Kuroda.
• Trump meets Japan, Australia leaders over trade, N. Korea threat.
• Bitcoin claws back over $1,000 after losing almost a third of value.
• U.S. inflation expectations edge up -NY Fed survey.
• OPEC, allies unlikely to delay decision on oil cut extension.
• OPEC points to larger 2018 oil supply deficit as the market tightens.
• Venezuela meets creditors in bid to dodge default.
Looking Ahead - Economic Data (GMT)
• Australia Oct NAB Business conditions, 14 previous
• Australia Oct NAB Business confidence, 7 previous
• Japan Q3 GDP q/q, 0.3% forecast, 0.6% previous
• Japan Q3 GDP q/q annualised, 1.3% forecast, 2.5% previous
• Japan Q3 GDP Pvt Consumption prelim, -0.4% forecast, 0.8% previous
• Japan Q3 GDP capital expenditure, 0.3% forecast, 0.5% previous
• Japan Q3 GDP external demand, 0.4% forecast, -0.3% previous
• China Oct Urban investment (ytd) y/y, 7.4% forecast, 7.5% previous
• China Oct Industrial output y/y, 6.3% forecast, 6.6% previous
• China Oct Retail sales y/y, 10.4% forecast, 10.3% previous
Looking Ahead - Events, Other Releases (GMT)
• 08:05 Chicago Fed President Charles Evans speaks in Germany
• 09:00 ECB board member Sabine Lautenschlaeger speaks in Germany
• 09:00 ECB Chair of the Supervisory Board Daniele Nouy speaks in Germany
• 10:00 ECB's Draghi, Fed's Yellen, BoE's Carney and BoJ's Kuroda speak in Frankfurt, Germany
• 13:15 St. Louis Fed President Bullard speaks in Louisville
• 15:30 ECB board member Benoit Coeure speaks in Brussels, Belgium
• 18:05 Atlanta Fed President Raphael Bostic speaks in Alabama
Currency Summaries
EUR/USD is likely to find support at 1.1621 levels and currently trading at 1.1661 levels. The pair has made session high at 1.1673 and hit lows at 1.1637 levels. The euro edged higher against US dollar on Monday as investors awaited a central bank conference on Tuesday where central bankers may share their thoughts on the global economy. European Central Bank chief Mario Draghi, U.S. Federal Reserve Chair Janet Yellen, Bank of Japan Governor Haruhiko Kuroda and Bank of England's head Mark Carney will form an all-star panel on Tuesday at an ECB-hosted conference in Frankfurt. Draghi hinted at tweaks in the central bank's aggressive stimulus policy at a major forum in Portugal in June, fuelling a euro rally and prompting him to soften his stance. The single currency climbed more than 8 percent since his comments at Sintra before peaking out at more than a 2-1/2 year high near $1.21 in early September. It has declined more than 3.5 percent since and was trading a shade weaker at $1.1650 against the greenback on Monday. The dollar continued to enjoy the support of last week's spike in U.S. bonds yields. The dollar index, which tracks the greenback against six major currencies, was up 0.1 percent at 94.49, recovering ground after a 0.6 percent decline last week.
GBP/USD is supported in the range of 1.3059 levels and currently trading at 1.3108 levels. It reached session high at 1.3135 and dropped to session low at 1.3067 levels. Britain's pound declined sharply against the dollar on Monday as political uncertainty in the United Kingdom weighed on British Pound. Investors were worried about Theresa May's ability to stay on as British prime minister and get what they consider to be a good exit deal from the European Union. May's blueprint for Britain's departure from the EU faces a crucial test starting on Tuesday, when lawmakers try to win concessions on the government's legislation to sever ties. That test comes after the Sunday Times reported that 40 lawmakers from her ruling Conservative Party had agreed to sign a letter of no-confidence in her - eight short of the number needed to trigger a leadership contest. Sterling is sensitive to any signs Britain could be heading towards a "hard" Brexit a scenario in which the country would lose any kind of preferential access to the single markets. It is also sensitive to domestic political uncertainty, and any risk that another election could be called. The pound fell as much as 1 percent earlier on Monday to hit a one-week low of $1.3063, before recovering to trade around $1.31113 by 20:00 GMT, still down 0.7 percent on the day.
USD/CAD is supported at 1.2664 levels and is trading at 1.2727 levels. It has made session high at 1.2740 and lows at 1.2707 levels. The Canadian dollar weakened against its U.S. counterpart on Monday, paring some of its recent gains despite higher oil prices, as uncertain prospects for a U.S. tax overhaul weighed on risk appetite. Uncertainty over a U.S. tax overhaul deal pushed world stock markets further away from recent record highs. Canada's commodity-linked currency tends to lose ground when investors become risk-averse. Oil, one of Canada's major exports, was supported by Middle East tensions and record long bets by fund managers. But the Canadian dollar was unlikely to recapture its tight link with the price of oil even as the interest rate outlook settles, given that crude trades far removed from levels needed to affect investment in Canada's energy sector. The Canadian dollar was trading at C$1.2733 to the greenback, or 78.59 U.S. cents, down 0.3 percent. The currency traded in a range of C$1.2671 to C$1.2727. On Friday, it touched its strongest in more than two weeks at C$1.2666. Canada's manufacturing sales data for September is due on Thursday and the October inflation report will be released on Friday. Economists expect the annual inflation rate to have cooled to 1.4 percent in October, which will likely give the Bank of Canada room to take its time raising interest rates after two back-to-back hikes earlier this year.
USD/JPY is supported around 113.00 levels and currently trading at 113.55 levels. It peaked to hit session high at 113.68 and made session lows at 113.21 levels. The U.S. dollar strengthened against the yen on Monday as dollar recouped some of its earlier losses as uncertainty over a U.S. tax reform plan stoked risk aversion. The head of the House of Representatives' tax-writing committee said on Sunday he would not accept elimination of a federal deduction for state and local taxes, opposing a proposal from Senate Republicans that would hike taxes for some middle-class Americans. House Ways and Means Committee Chairman Kevin Brady said he guaranteed the deduction would not be entirely scrapped in a final tax bill that emerges from dueling plans already unveiled by Republicans in the House and the Senate. Lawmakers will debate their respective plans this week before heading home for the Thanksgiving Day holiday. Republicans hope to resolve their differences in time to reach their goal of enacting the legislation by the end of the year. Worries that a proposed U.S. corporate tax cut could be delayed to 2019 have pressured the greenback recently, but the dollar was on a firmer footing on Monday ahead of important domestic economic data, including inflation and retail sales numbers, due later this week.
Equities Recap
Heavy losses in utility after a profit warning and other disappointing company updates weighed on European shares on Monday, pushing the pan-European benchmark to its lowest level since end-September.
The UK's benchmark FTSE 100 closed down by 0.2 percent, FTSEurofirst 300 ended the day down by 0.47 percent, Germany's Dax ended down by 0.3 percent, and France’s CAC finished the down by 0.7 percent.
U.S. stock indexes rose on Monday as a sharp drop in General Electric shares was more than offset by gains in high dividend-paying sectors including consumer staples and utilities.
Dow Jones closed up by 0.08 percent, S&P 500 ended up 0.09 percent, Nasdaq finished the day up by 0.09 percent.
Treasuries Recap
In afternoon trading, the 10-year Treasury yield was at 2.402 percent, up slightly from 2.4 percent late on Friday.
The two-year yield hit a nine-year peak of 1.687 percent, up from 1.662 percent last Friday.
U.S. 30-year yields, meanwhile, fell to 2.867 percent, from Friday's 2.88 percent.
Commodities Recap
Gold recouped some of the previous session's hefty losses on Monday as the U.S. dollar steadied and uncertainty over a U.S. tax reform plan stoked risk aversion, pulling equities from their recent record highs.
Spot gold was up 0.2 percent at $1,279 an ounce by 1:41 p.m. EST (1841 GMT), while U.S. gold futures for December delivery settled up $4.70, or 0.4 percent, at $1,278.90 per ounce.
Oil prices held steady in a tight range Monday after briefly testing lower, with support from Middle East tensions and record long bets by fund managers balanced by rising U.S. production.
Brent crude futures settled down 36 cents, or 0.6 percent, at $63.16 a barrel while U.S. West Texas Intermediate (WTI) crude futures settled up 2 cents a barrel at $56.76.
