Market Roundup
• Oil falls on oversupply, demand concerns; U.S. crude hits 3-month low.
• Sanders supporters boo as he urges them to elect Clinton U.S. president.
• NY Fed-FX swaps with foreign central banks total $185 million in latest week.
• NY Fed: FX swaps with BOJ totaled $180 mln in latest week.
• Turkey detains 42 journalists in crackdown as Europe sounds alarm.
• Brazil's Meirelles says spending cap key to avoid tax hikes.
• US companies hoarding cash in Q3: survey.
• Mixed messages on FX volumes from UK and US central bank surveys.
• Russian central bank seen holding rates as inflation worries resurface.
• Mexico May retail sales +8.6% y/y vs forecast 6.10%, previous 10.60%.
Looking Ahead - Events, Other Releases (GMT)
• 22:45 New Zealand Trade - Imports Jun 4.22b-previous
• 22:45 New Zealand Trade Balance Jun forecast 125.0m, 358.0m- previous
• 22:45 New Zealand Trade Balance YY Jun forecast -3.30b, -3.63b- previous
• 22:45 New Zealand Trade - Exports Jun 4.57b-previous
Looking Ahead - Events, Other
No significant events
Currency Summaries
EUR/USD is likely to find support at 1.0950 levels and currently trading at 1.0993 levels. The pair has made session high at 1.0993 and hit lows at 1.0951 levels. U.S. dollar declined against euro as demand for riskier assets increased ahead of the U.S. Federal Reserve's meeting on Tuesday and Wednesday, and a Bank of Japan meeting on Friday. The dollar had gained against major currencies in recent weeks as better-than-expected economic data revived expectations that the Fed would raise interest rates again this year. Japanese and European central banks, by contrast, are seen as adopting more stimulative policies to stave off deflation and generate growth. The Fed is seen as unlikely to raise interest rates on Wednesday, though investors will be looking for any signs that the U.S. central bank might be more likely to hike rates in coming months. Improving economic data has increased expectations that the Fed will raise rates in December, after traders had entirely priced out the possibility of a rate hike this year.
GBP/USD is supported in the range of 1.3062 currently trading at 1.3138 levels. It reached session high at 1.3163 and hit low at 1.3091 levels. The British pound initially declined against the dollar in the US session but rebounded strongly as after US stocks edged lower on Monday as a 2 percent drop in crude prices weighed on investor sentiment. Shares in Europe closed slightly higher but a gauge of equity markets worldwide was lower. Sterling has tumbled almost 12 percent against the dollar since Britons voted to leave the European Union last month. Investors are worried that "Brexit" will have negative consequences on the economy and in particular Britain's already huge current account deficit, which will widen further if investment flows dry up. Sterling was trading flat on the day at $1.3108, having traded at $1.3156 before the report. Against the euro, the pound was also flat at 83.77 pence per euro. Sterling had been supported last week by hawkish comments from two BoE policymakers, before the release of the Markit purchasing managers' index (PMI) surveys.
USD/CAD is supported at 1.3180 levels and is trading at 1.3219 levels. It has made session high at 1.3057 and lows at 1.3241 levels. The Canadian dollar declined against its U.S. counterpart on Monday, as Canada dollar was, hurt by a slide in oil prices on concerns about oversupply and economic headwinds. U.S. crude prices were down 2 percent at $43.29 a barrel, while Brent crude lost 1.8 percent to $44.88. Canada's economy should rebound "over the course of the year" from the impact of a wildfire in its energy heartland, Finance Minister Bill Morneau said on Saturday on the sidelines of a G20 meeting in Chengdu, China. Meanwhile, Traders and strategists said the Canadian currency could face further selling pressure in the short term, especially if the U.S. Federal Reserve strikes a hawkish tone later this week.
AUD/USD is supported around 0.7453 levels and currently trading at 0.7468 levels. It hit session high at 0.7473 and made session lows at 0.7455 levels. The Australian dollar was steadied on Monday as most of the investors on the sidelines ahead of inflation data later this week which could cement the case for another rate cut as early as next month. Underlying inflation is expected to dip to a fresh trough of 1.4 percent. The figures are out on July 27. The Australian dollar was a shade higher on Monday at $0.7471 after slipping 1.44 percent last week, breaking a robust run of seven straight weeks of gains. That was also its worst weekly showing since the beginning of June. Australian government bond futures were largely unchanged, with the three-year bond contract off a tick at 98.58. The 10-year contract also lost a tick to 98.0650.
Equities Recap
European shares inched higher on Monday, with low-cost airline Ryanair climbing after it issued a bullish outlook while shares in William Hill surged on bid interest from its rivals.
UK's benchmark FTSE 100 closed down by 1.2 percent, the pan-European FTSEurofirst 300 ended the day down by 1.63 percent, Germany's Dax ended down by 1.7 percent, France’s CAC finished the day down by 1.8 percent.
U.S. stocks receded from record highs on Monday as oil weighed on energy shares and investors awaited an avalanche of quarterly reports.
Dow Jones closed down by 0.42 percent, S&P 500 ended the day by down 0.30, Nasdaq finished the day down by 0.05 percent.
Treasuries Recap
Short-dated U.S. Treasury yields climbed on Monday to four-week highs following a weak $26 billion two-year note sale, part of $88 billion of coupon-bearing government debt being auctioned this week.
Benchmark 10-year Treasury notes were last down 2/32 in price for a yield of 1.575 percent, up almost 1 basis point from Friday.
Commodities Recap
Gold pared losses on Monday as the dollar and world stock markets turned lower ahead of central bank meetings in the United States and Japan.
Spot gold was down 0.2 percent at $1,319.63 an ounce by 2:32 p.m. EDT (1832 GMT), while U.S. gold futures for August delivery settled down $3.9, or 0.29 percent, at $1,319.50.
Oil prices fell more than 2 percent on Monday, with U.S. crude hitting a three-month low, on rising concerns that a global glut of crude and refined products would pressure markets, delaying a long-anticipated rebalance in the market.
U.S. crude settled down $1.06 at $43.13 a barrel, after touching a three-month low of $42.97 during the session. U.S. gasoline futures tumbled to a low of $1.3291 a gallon during the session, the lowest since March 4.
Brent crude futures ended the session down 97 cents at $44.72 a barrel, after hitting their lowest since May 10 at $44.55.
