Market Roundup
• Italy's Savona confident of agreement with EU over budget .
• China to raise export tax rebates amid trade war .
• U.S. Treasury still concerned about yuan depreciation –official.
• Fed's Bullard: Emerging markets "as prepared as they can be" for U.S. rate moves.
• U.S. data "looking good" ahead of December rates meeting, Fed's Bullard says.
• Rising inequality will likely weigh on U.S. credit rating - Moody's.
• US Sep Employment Trends, 110.8, 110.9 previous, 111.2 revised.
• Brazil markets soar on strong 1st-round vote for Bolsonaro.
• ECB to start rate hike discussions in January –Knot.
• Global downturn has become more likely, Germany warns.
Looking Ahead - Economic Data (GMT)
• 9 Oct 05:20 Japan Aug Current Account NSA JPY, 1,896.6B forecast, 2,009.7B previous
• 9 Oct 06:00 Australia Sep NAB Business Conditions, 15 previous
• 9 Oct 06:00 Australia Sep NAB Business Confidence, 4 previous
• 9 Oct 10:30 Japan Sep Economy Watchers Poll SA, 48.7 previous
Looking Ahead - Events, Other Releases (GMT)
• Oct 9 N/A ECB governing council non-monetary policy meeting in Frankfurt.
• Oct 9 07:00 Riksbank Deputy Governor Cecilia Skingsley will participate in a seminar in Stockholm
• Oct 9 08:30 Bank of England's Financial Policy Committee statement to be published in London
• Oct 9 11:30 Federal Reserve Bank Dallas President Robert Kaplan speaks before Economic Club of New York breakfast, in New York
• Oct 9 14:00 Federal Reserve Bank of Chicago President Charles Evans speaks at the Opportunity Finance Network Conference 2018 in Chicago
• Oct 9 15:30 Riksbank Deputy Governor Henry Ohlsson holds a lecture at Folkets Hus in Gothenburg, Sweden
• Oct 9 17:00 Federal Reserve Bank of Philadelphia President Patrick Harker speaks at a Global Interdependence Center event in Philadelphia
Currency Summaries
EUR/USD is likely to find support at 1.1419 levels and currently trading at 1.1492 levels. The pair has made session high at 1.1494 and hit lows at 1.1458 levels. The euro slipped lower against the U.S. dollar on Monday as spat between Italy and the European Union over Rome's budget plans weighed on single currency. Italian Deputy Prime Minister Matteo Salvini, speaking at a media conference with French far-right leader Marine Le Pen, denounced European Commission President Jean-Claude Juncker and Economics Commissioner Pierre Moscovici as enemies of Europe. In the meantime, the dollar continued its recent march higher on upbeat domestic economic data and safe-haven demand amid geopolitical concerns. Nervous investors piled more money into the dollar, as speculators' bullish bets in the greenback grew to their highest level since December 2016 last week. The single currency fell 0.26 percent against the dollar to $1.1491 and not far from a more-than one-year low of $1.1355 hit in mid-August. The euro fell 0.31 percent to 1.1401 Swiss franc, and shed 0.92 percent against 129.79 yen. An index that tracks the greenback against a basket of major currencies was up 0.17 at 95.76.
GBP/USD is supported in the range of 1.3000 levels and currently trading at 1.3091 levels. It reached session high at 1.3098 and dropped to session low at 1.3026 levels. Britain's pound declined against the dollar on Monday as traders approached with more caution recent statements that the chances of a breakthrough in Brexit negotiations have gone up. European Union negotiators said on Friday an agreement with Britain was "very close" and European Commission President Jean-Claude Juncker said on Saturday a deal would be reached in November, if not this month. Many strategists remain optimistic for sterling's fortunes should the UK make more progress towards a Brexit deal. That had helped push the pound up above $1.30, but investors booked profits at the start of this week, with some still cautious about whether a Brexit agreement was likely. With the dollar extending its own broad rally, the pound more than half a percent to as low as $1.3029, erasing recent gains, before recovering to trade at $1.3092.A broader sell-off across markets prompted a rush into the safety of the U.S. currency and sterling was one of several currencies to rack up losses on Monday.
USD/CAD is supported at 1.2906 levels and is trading at 1.2956 levels. It has made session high at 1.3009 and lows at 1.2951 levels. The Canadian dollar strengthened against its U.S. counterpart on Monday as selloff in global stocks and worries over economic growth in China increased demand for commodity-linked currencies like Canadian dollar. The United States remains concerned about China's recent currency depreciation, a senior Treasury official said, adding that it was unclear whether Treasury Secretary Steven Mnuchin would meet with any Chinese officials this week. Washington last month slapped tariffs on $200 billion worth of Chinese goods, which prompted Beijing to retaliate with duties on $60 billion worth of U.S. products. The nervous mood was aggravated by China's central bank on Sunday cutting the level of cash that banks must hold as reserves, aimed at lowering financing costs. The dollar rose slightly in response to the turmoil in Chinese markets. Some investors have grown concerned that the stronger dollar, along with mounting tariffs, could hurt large U.S. exporters as their products become more expensive for overseas customers. The Canadian dollar was last trading at C$1.2955 to the greenback, up 0.16 percent.
USD/JPY is supported around 110.17 levels and currently trading at 111.06 levels. It peaked to hit session high at 111.20 and made session lows at 110.67 levels. The dollar declined against the Japanese yen on Monday as unease over the impact of the escalating U.S.-Sino trade war on China's growth increased demand for safe haven Japanese yen. Beijing announced a steep cut in the level of cash that banks must hold as reserves, aimed at lowering financing costs and spurring growth amid the trade spat between China and the United States. The United States remains concerned about China's recent currency depreciation, a senior Treasury official said, adding that it was unclear whether Treasury Secretary Steven Mnuchin would meet with any Chinese officials this week. Washington last month slapped tariffs on $200 billion worth of Chinese goods, which prompted Beijing to retaliate with duties on $60 billion worth of U.S. products. Beijing moved over the weekend to spur more lending. Fear of slowing growth led Chinese stocks fall to its biggest one-day drop since February after markets re-opened following a week-long holiday in China. The dollar index rose 0.17 percent. The Japanese yen strengthened 0.65 percent versus the greenback at 113.09.
Equities Recap
European shares fell on Monday as fears a trade war could have a bigger impact than expected on China added to concerns that rising U.S. interest rates are gradually making stock markets less attractive for investors.
The UK's benchmark FTSE 100 closed down by 1.08 percent, FTSEurofirst 300 ended the day down by 1.13 percent, Germany's Dax ended down by 1.40 percent, and France’s CAC finished the down by 1.13 percent.
The S&P 500 cut losses to end nearly flat on Monday after having been weighed down by concerns about slowing Chinese economic growth due to trade tensions between China and the United States.|
Dow Jones closed up by 0.21 percent, S&P 500 ended down 0.02 percent, Nasdaq finished the day
Commodities Recap
Gold fell to its lowest level in a week on Monday as investors sought safety in the U.S. dollar on concerns about a selloff in global stocks worsened by worries over economic growth in China.
Spot gold dipped 1.4 percent to $1,185.81 an ounce by 1355 p.m. EDT (1755 GMT), on track for its biggest one-day percentage loss since Aug. 15. The yellow metal earlier touched its lowest since Sept. 28 at $1,183.19.
U.S. gold futures for December settled down $17, or 1.41 percent, at $1,188.6.
Oil prices almost fully recovered from a sharp drop on Monday, paring losses as investors bet China's economic stimulus moves would lift crude demand in the world's No. 2 economy.
Brent crude hit a session low of $82.66 but settled just 25 cents lower at $83.91 per barrel. Brent hit a four-year high of $86.74 last week.
U.S. crude had fallen to a session low of $73.07 per barrel but climbed back up to settle at $74.29, just 5 cents lower.
