Market Roundup
- U.S. service sector adds to data disappointment with miss on ISM.
- ISM Non-Mfg 56.9 vs forecast- 57.5 and 59.0 in August; new orders drop.
- U.S. Markit services PMI records only a slight miss versus flash.
- Ex-Fed chief Bernanke: Recent jobs numbers bad news for Fed plans to hike.
- In Latin America, Brazil svcs PMI slumps to 41.7 from 44.8, Chile economic activity misses.
- Pacific Rim countries reach landmark trade deal, U.S. lawmakers skeptical.
- Mexico central bank wary of fx inflation pass through but it has been low so far.
- NATO denounces Russian incursion into Turkish air space.
Looking Ahead - Economic Data (GMT)
- 00:30 Australia Trade Balance Aug 2.55bln v 2.46 billion-previous
Looking Ahead - Events, Other Releases (GMT)
- 03:30 Australia-RBA Meeting - no change expected
Currency Summaries
EUR/USD is likely to find support at 1.1130 levels and currently trading at 1.1182 levels. The pair has made session high at 1.1287 and hit lows at 1.1172 levels. The U.S. dollar rose against euro on Monday on renewed risk appetite in the wake of a disappointing U.S. jobs report that suggested the Federal Reserve would hold off on raising interest rates for longer. Data on Friday showing a stumble in U.S. jobs growth has led traders to expect that the Fed will delay its first rate hike since 2006 to early next year. That view boosted risk appetite and put selling pressure on the euro, yen, and Swiss franc, which traders view as safer funding currencies given their low yields. US rate hike is expected to boost the dollar by driving investment flows into the United States. While the dollar has previously weakened on expectations for later Fed rate hikes, the greater risk appetite took precedence on Monday. The euro, which was last modestly higher against the dollar at $1.1215, remained below Friday's nearly two-week high of$1.13190. To the upside, immediate resistance can be seen at 1.1210. To the downside, immediate support level is located at 1.1170 levels.
GBP/USD is supported in the range of 1.5110 levels and currently trading at 1.5149 levels. It reached session high at 1.5188 and dropped to session low at 1.5138 levels. Sterling sank against the dollar on Monday after a monthly survey of the services sector crushed any remaining market expectations that the Bank of England is likely to raise interest rates any time soon. The 53.3 point reading on the index of purchasing managers in a sector that dominates British economic output was the lowest since May 2013, and sharply below analysts' forecasts and the previous month's figures. The pound dropped almost half a cent in response, to $1.5161, down 0.2 percent on day and handing back some of the gains it had made along with a raft of other currencies against the dollar since U.S. jobs data on Friday. Against the euro, sterling did slightly better, inching up 0.1 percent on the day to 73.83 pence per euro. The U.S. non-farm payrolls on Friday shocked markets out of any expectations of a rise in Federal Reserve interest rates this year, and the PMI numbers added to a general sense that the world economy was slipping backwards. To the upside, immediate resistance can be seen at 1.5162. To the downside, immediate support level is located at 1.5135 levels.
USD/JPY is supported around 120.10 levels and currently trading at 120.44 levels. It peaked to hit session high at 120.55 and made session lows at 120.36 levels. The U.S. dollar rose against the safe-haven Japanese yen on Monday on renewed risk appetite in the wake of a disappointing U.S. jobs report, which suggested the Federal Reserve would remain accommodative for longer. The U.S. dollar index, which measures the greenback against a basket of six major currencies, was last up 0.26 percent at 96.081, marking a recovery from a nearly two-week low of 95.218 hit Friday. The dollar hit a one-week high against the yen of 120.55 yen. On the data front, the pace of growth in the U.S. services sector decelerated in September as new orders and business activity slowed, according to an industry report released on Monday. The Institute for Supply Management said its gauge of U.S. services industries fell to 56.9 percent, its lowest since June and down from 59.0 in August. The ISM data follows Friday's disappointing U.S. employment report, which showed employers hired 142,000 people in September, far fewer than the 203,000 expected. . To the upside, immediate resistance can be seen at 120.20. To the downside, immediate support level is located at 120.60 levels.
USD/CAD is supported at 1.3060 levels and is trading at 1.3092 levels. It has made session high at 1.3104 and lows at 1.3073 levels. The Canadian dollar strengthened against the greenback on Monday as investors tried to gauge how long the U.S. Federal Reserve will keep interest rates at ultra-low levels following last week's disappointing jobs report south of the border. Markets have been expecting the Fed will begin to raise rates before the end of the year but data on Friday that showed the U.S. added 142,000 jobs last month, far below expectations, raised some doubts.That put pressure on the U.S. dollar on Monday to the benefit of the Canadian dollar. Since hitting an 11-year low at the end of September, the loonie has gained 2.5 percent. Near-term risk for the Canadian dollar will be centered on the broader tone ahead of key releases due later this week, including Canada's trade balance on Tuesday and the domestic jobs report on Friday. The currency's strongest level of the session was C$1.3065, while its weakest level was C$1.3175. To the upside, immediate resistance can be seen at 1.3110. To the downside, immediate support level is located at 1.3060 levels.
Equities Recap
European shares rose sharply on Monday as weak data in Europe and elsewhere reinforced expectations the broad monetary policy backdrop will remain equity-friendly, with Glencore and ArcelorMittal lifting the mining sector.
UK's benchmark FTSE 100 closed up by 2.57 percent, the pan-European FTSEurofirst 300 ended the day down by 2.15 percent, Germany's Dax ended up by 2.1 percent, France's CAC finished the day down by 2.17 percent.
U.S. stocks rose on Monday, with the S&P 500 up for the fifth day, after last week's disappointing jobs report hardened views that the Federal Reserve won't raise interest rates this year.
Dow Jones closed up by 1.83 percent, S&P 500 ended up by 1.81 percent, Nasdaq finished the day up 1.53 percent.
Treasuries Recap
U.S. Treasury debt prices fell on Monday, although benchmark yields were still near their lowest since April, on increased risk appetite spurred by weak employment and services sector data and increasing doubts the Federal Reserve will raise interest rates by year-end.
The Benchmark 10-year Treasuries were down 10/32 in price to yield 2.024 percent, up more than 3 basis points from late 30-year bond was down 25/32 in price to yield 2.868 percent, up 4 basis points from Friday.
Commodities Recap
Gold was little changed on Monday, as profit-taking set in after rallying on U.S. economic data that pushed back expectations of a Federal Reserve interest rate rise to early 2016, while silver extended gains on chart-based buying.
Spot gold had turned down 0.1 percent at $1,136.11 an ounce by 2:49 p.m. EDT (1849 GMT). U.S. gold futures for December delivery settled up 0.1 percent at $1,138.10.
Crude oil prices settled up more than 2 percent on Monday, bolstered by a rally in U.S. gasoline and Russia's willingness to meet other major oil producers to discuss the market.
Global crude benchmark Brent settled at $49.25 a barrel, up $1.12 or 2.3 percent.
U.S. oil's benchmark West Texas Intermediate (WTI) crude rose 72 cents, or 1.6 percent, to finish at $46.26.
