Market Roundup
• US Employment trends Mar 131.4 v 131.1 previous.
• French borrowing costs spike as Melenchon shakes up presidential race; Election uncertainty pushes French-German spread higher.
• Fed's Bullard: U.S. Fed could end reinvestment policy this year.
• ECB’s Constancio: ECB independent do not follow Fed, considers current monetary policy stance appropriate, ready to react to downside shocks.
• Role of trade as growth driver is threatened by slowdown in trade reform since early 2000’s- IMF, WTO, World Bank.
• IMF’s Lagarde: IMF more upbeat about the global economy in 2017/2018 than in 2016.
• SARB says downgrades, weakening rand pose risk; S&P, Fitch have downgraded South African credit to junk, Bank says will not intervene directly to support rand.
• Oil rises towards $56 on Libyan field shutdown, tensions over Syria.
Looking Ahead - Economic Data (GMT)
• 22:45 New Zealand Electronic Card Retail Sales MoM Mar -0.60%-previous
• 22:45 New Zealand Electronic Card Retail Sales YoY* Mar 2.60%- previous
• 01:30 Australia NAB Business Conditions Mar 9- previous
• 01:30 Australia NAB Business Confidence Mar 7- previous
Looking Ahead - Events, Other Releases (GMT)
• No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.0561 levels and currently trading at 1.0591 levels. The pair has made session high at 1.0606 and hit lows at 1.0572 levels. The euro declined against dollar on Monday as the continental currency was weighted down on uncertainty over the upcoming French presidential election as investors took stock of polls showing a tightening race. Investors are closely following the campaign as one candidate far-right leader Marine Le Pen has promised a referendum on France's membership of the European Union if she wins, fuelling concerns of an unravelling of the bloc after Britain's vote to leave last year. Polls have for weeks shown Le Pen and centrist Emmanuel Macron on track to top the first round of voting on April 23 and go through to the May 7 run-off. However, two less fancied candidates, Francois Fillon and Jean-Luc Melenchon held mass rallies on Sunday, making it an increasingly tight race. The dollar was slightly lower against a currency basket in US session after touching three-week highs in Asia. The dollar index, which tracks the greenback against six major currencies, was off slightly at 101.22 after rising as high as 101.340, its highest since March 15. The euro was 0.1 percent lower at $1.0591 in late US session, hovering above its lowest level in a month $1.0570 hit overnight.
GBP/USD is supported in the range of 1.2333 levels and currently trading at 1.2411 levels. It reached session high at 1.2427 and dropped to session low at 1.2398 levels. Sterling inched higher against the dollar on Monday, bouncing back from a three-week low as investors looked forward to the upcoming inflation data that could revive bets on eventually tighter Bank of England policy. The pound gained over 1.5 percent against the dollar in March on the back of rapidly accelerating prices, with markets moving to price in the chance of an interest rate rise at the start of next year as one BoE rate-setter - albeit an ongoing one voted in favour of a hike. But it has fallen back since the start of April, with comments from BoE Governor Mark Carney as well as fellow policymakers such as Gertjan Vlieghe pouring cold water on the idea that Britain's record-low interest rates could increase anytime soon despite rising inflation. Sterling gained 0.4 percent on Monday to $1.2419, leaving it about half a cent above a three-week low of $1.2365 touched on Friday. CPI (consumer price inflation)data is due at 0830 GMT on Tuesday are expected to show consumer prices increased 1.9 percent in March compared with the same month last year, a slight deceleration from February's rate of 2 percent. Wages data on Wednesday will also be closely watched, as will any further signals of the early mood in Brexit negotiations.
USD/CAD is supported at 1.3300 levels and is trading at 1.3331 levels. It has made session high at 1.3366 and lows at 1.3326 levels. Canadian dollar strengthened on Monday against its U.S. counterpart, helped by higher oil prices and stronger-than-expected housing starts data which jumped to its highest level in more than nine years. The seasonally adjusted annual rate of housing starts rose to 253,720 units in March, topping economists' forecasts for 215,000. February was revised slightly higher to 214,253 units. Oil prices rose more than 1 percent, supported by strong demand, uncertainty over the conflict in Syria and a shutdown at Libya's largest oilfield. On Friday, the loonie rose sharply after Canadian jobs data added to evidence that the domestic economy is improving. Economists expect the Bank of Canada could raise its first-quarter growth forecast when it releases its interest rate announcement and latest economic outlook on Wednesday. Still, the central bank is widely expected to hold rates at 0.50 percent and may stick to its cautious tone given the number of uncertainties facing the Canadian economy, particularly U.S. trade policy. The Canadian dollar was trading at C$1.3332 to the greenback, or 74.87 U.S. cents, stronger than Friday's close of C$1.3410, or 74.57 U.S. cents.
AUD/USD is supported around 0.7455 levels and currently trading at 0.7499 levels. It hit session high at 0.7548 and made session lows at 0.7662 levels. The Australian dollar hit multi-week lows against the dollar on Monday as heightened geopolitical tension weighed on investor sentiment, turning their focus towards safe assets. Investors were watching developments in the Syrian civil war following U.S. missile strikes on an airbase in Syria last week that pumped up safe-haven assets, such as the yen and gold. Geopolitical tensions in Asia were also in focus, after the U.S. decision to move a Navy strike group toward the Korean peninsula. On the data front, Australian home loan commitments for February, released by the Australian Bureau of Statistics on Monday showed home loans had retraced slightly in February, a welcome sign for policymakers who have been hoping for a slowdown in lending in the country's frothy property market. The Aussie ticked higher on the yen on Monday but stayed near a 4-1/2 month trough hit last week. The pound was at a four-month peak, while the Swiss franc was at a 2-week high on the Aussie.
Equities Recap
Merger and acquisition activity among drugmakers led otherwise flat markets in Europe on Monday, while Banco Popular hit a record low after saying it would raise more capital.
UK's benchmark FTSE 100 up 0.1, the pan-European FTSEurofirst 300 ended the day up by 0.3 percent, Germany's Dax ended down by 0.1 percent, France’s CAC finished the day down by 0.04 percent.
U.S. stocks ended a choppy session up slightly on Monday as gains in energy shares offset losses in financials ahead of bank quarterly earnings this week.
Dow Jones closed flat, S&P 500 ended up 0.07 percent, Nasdaq finished the day up by 0.06 percent.
Treasuries Recap
U.S. Treasury yields fell on Monday as jitters about the French presidential election, concerns about North Korea and tension between U.S. and Syria underpinned safe-haven demand for U.S. government debt.
The yield on the benchmark 10-year Treasury was 2.362 percent, down 1 basis point from late on Friday, while the yield on 30-year was 1 basis point lower at 2.988 percent.
Commodities Recap
Oil rose toward $56 a barrel on Monday, supported by another shutdown at Libya's largest oilfield over the weekend and geopolitical tensions following last week's U.S. missile strike on Syria.
Brent crude, the global benchmark, rose 74 cents to settle at $55.98, not far from the one-month high of $56.08 reached on Friday. U.S. crude was up 84 cents to settle at $53.08.
Gold slipped further on Monday from the previous session's five-month high, as expectations that the Federal Reserve will press ahead with interest rate hikes counterweighed concerns over political tensions in North Korea and the Middle East.
Spot gold was down 0.2 percent at $1,251.55 an ounce at 1415 GMT, while U.S. gold futures for June delivery were down $4.20 at $1,253.10.
