Market Roundup
• Democrats, Republicans make last pitch as campaigns clatter to hectic end.
• China's Xi promises to raise imports amid trade row with U.S.
• Trump says he wants to go slower on sanctions for Iran's oil.
• US Oct ISM N-Mfg PMI, 60.3, 59.3 forecast, 61.6 previous.
• US Oct ISM N-Mfg Bus Act, 62.5, 64.5 forecast, 65.2 previous.
• US Oct ISM N-Mfg Employment Index, 59.7 forecast, 62.4 previous.
• US Oct Markit Comp Final PMI 54.9, 54.8 previous.
• US Oct Markit Svcs Final PMI 54.8, 54.7 previous.
• Italy tells euro zone peers working on compromise over budget- official .
• Ireland says UK cannot unilaterally scrap border backstop.
• Bank of Canada says volatile markets, higher bond yields a good sign.
• CA Oct Reserve Assets Total (USD), 82,088M, 80,683M previous.
Looking Ahead - Economic Data (GMT)
• 5 Nov 23:30 Japan Sep All Household Spending y/y, 1.6% forecast, 2.8% previous
• 5 Nov 23:30 Japan Sep All Household Spending p/p, -1.8% forecast, 3.5% previous
• 6 Nov 03:30 Reserve Bank of Australia Nov Cash Rate, 1.50% forecast, 1.50% previous
Looking Ahead - Events, Other Releases (GMT)
• NA ECB's Luis de Guindos speaks at an ECOFIN meeting in Brussels
• NA Norway Central Bank's Oystein Olsen speaks at a conference hosted by The Association of Real Estate in Oslo
• NA Norway Central Bank's Egil Matsen speaks at a conference hosted by The Norwegian Savings Banks Association in Trondheim, Norway
• 07:30 ECB's Peter Prate chairs the panel: “Lender of last resort: who should do what?” at a colloquium "Managing financial crises: where do we stand? in Brussels
• 08:00 European Union finance ministers meeting in Brussels
• 09:00 The Riksbank's Kerstin af Jochnick speaks at the Boligmarkedet 2018 conference on the significance of interest rates for the Swedish housing market in Oslo
• 11:15 ECB's Benoit Coeure chairs the panel: "Financial crisis management in the current international monetary system" in Brussels
• 12:00 ECB's Sabine Lautenschlager speaks at Luncheon of Chairs of Supervisory Boards of banks in Germany in Frankfurt
• 15:15 Riksbank's Stefan Ingves presents the Riksbank’s view of the payment system of today and tomorrow at the conference "Framtidens betalningar" in Stockholm
Currency Summaries
EUR/USD is likely to find support at 1.3330 levels and currently trading at 1.1414 levels. The pair has made session high at 1.1423 and hit lows at 1.1353 levels. The euro rose higher against US dollar on Monday as dollar dipped as investors took profits before U.S. midterm elections this week that may fuel volatility in global markets, and the British pound led gains on Brexit deal breakthrough hopes.The U.S. midterm congressional elections on Tuesday are expected to help the Democratic Party win control of the U.S. House of Representatives, with Republicans likely to retain their majority in the Senate. But market analysts warned that an unexpected outcome could trigger a massive unwind of long dollar positions and undermine the greenback which has rallied more than 7 percent from April lows against its rivals. That uncertainty kept investors from making big moves on Monday. Broader moves in the currency markets were muted with the euro up slightly by 5.3 basis points at $1.140, helped by the softer dollar rather than Europe's economic fundamentals.
GBP/USD is supported in the range of 1.2950 levels and currently trading at 1.3043 levels. It reached session high at 1.3048 and dropped to session low at 1.3009 levels. Sterling rose against the dollar on Monday after a report said Britain was nearing a deal for leaving the European Union and that an all-UK customs arrangement would be part of it.The currency was lifted by the Sunday Times report over the weekend that said an all-UK customs deal will be written into the legally binding agreement governing Britain's withdrawal from the European Union. That would mean an Irish "backstop" deal to avoid a hard border between the British province of Northern Ireland and the Irish Republic, is not required, the Times reported. The issue has been the main stumbling bloc to London and Brussels agreeing a deal. With talks at an impasse five months before Britain exits the European Union, investors are growing anxious and sterling is moving sharply on any news of a possible breakthrough. The currency has faltered in seven of the 10 months of this year so far, losing as much as 3.6 percent. Sterling traded up half a percent versus the dollar near a 10-day high of $1.3042.
USD/CAD is likely to find support at 1.3043 levels and is trading at 1.3108 levels. It has made intraday high at 1.3115 and lows at 1.3070 levels. The Canadian dollar edged lower against its U.S. counterpart on Monday as investors were cautious ahead of the U.S. congressional elections due on Tuesday which will determine whether the Republican or Democratic Party controls Congress. Opinion polls show strong chances that the Democratic Party may win control of the House of Representatives in the Nov. 6 midterm elections after two years of wielding no practical political power in Washington, with Republicans likely to keep the Senate. With the Federal Reserve meeting on Wednesday and Thursday, investors were also concerned about prospects for tighter U.S. monetary policy after strong economic data. Oil prices rose in choppy trading after five days of heavy losses as the United States imposed a range of sanctions aimed at curbing exports by Iran. The Canadian dollar was last trading 0.3 percent higher at 1.3076 to the greenback, or 76.48 U.S. cents. The currency traded in a narrow range of 1.3078 to 1.3112.
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 was little changed against Japanese yen on Monday as traders avoided making big bets ahead of U.S. congressional elections. Tuesday's elections will determine whether Democrats wrest one or both of the two chambers of Congress from Republicans.If Democrats win control of the House of Representatives, as many polls are indicating, analysts anticipate further gridlock that will not yield any fiscal legislation, such as the massive tax cuts enacted last December. The latest polls showed Republicans will likely retain their majority in the Senate. The market would keep one eye on the Federal Reserve though if Congress were to stimulate economic growth further with more tax cuts or spending which may push inflation higher and lead to higher interest rates.A Republican victory could also embolden Trump to pursue his protectionist international trade policies with even more import tariffs.
Equities Recap
European shares eased on Monday as last week's rebound ran out of steam on investor nervousness over fast-rising U.S. interest rates and Washington's trade dispute with Beijing.
UK's benchmark FTSE 100 closed up by 0.25 percent, the pan-European FTSEurofirst 300 ended the day up by 0.04 percent, Germany's Dax ended down by 0.21 percent, France’s CAC finished the day down by 0.01 percent.
The S&P 500 and the Dow Jones Industrial Average rose on Monday, as oil prices lifted energy stocks and defensive sectors such as utilities and real estate were in demand as investors were cautious about Iran sanctions and U.S. congressional elections.
Dow Jones closed up by 0.75 percent, S&P 500 ended down by 0.40 percent, Nasdaq finished the day up by 0.55 percent.
Treasuries Recap
U.S. Treasury yields fell on Monday as traders stepped back into the bond market following last week's sell-off to reduce their bearish positions and hedge against any surprises in the U.S. congressional elections on Tuesday.
The 30-year bond yield fell 2 basis points to 3.434 percent after on Friday touching 3.464 percent, which was the highest since July 2014.
The two-year yield was little changed at 2.912 percent, within striking distance of 2.920 percent on Friday, a level not seen June 2008.
Commodities Recap
Gold inched lower on Monday as investors took some profits following a recent rally, but the metal traded within a narrow range as caution set in ahead of the U.S. congressional elections.
Spot gold was down 0.1 percent at $1,230.76 per ounce by 1:30 p.m. EST (1830 GMT), trading in an $8 range. U.S. gold futures settled down $1, or 0.1 percent, at $1,232.30.
Oil prices were mixed on Monday after a steep five-day fall, as the United States formally imposed punitive sanctions on Iran but granted eight countries temporary waivers allowing them to keep buying oil from the Islamic Republic.
Brent crude futures rose 34 cents to settle at $73.17 a barrel. U.S. West Texas Intermediate (WTI) crude futures fell 4 cents to settle at $63.10 a barrel.
