Market Roundup
• UK's May tries to calm Brexit rebels, says deal almost done.
• Italy tells EU no change to budget, but will keep eye on debt, deficit.
• Eurogroup's Centeno confident of budget deal between Rome and EU.
• Trump vows to cut Central America aid, raises alarm on migrant caravan.
• Russia pledges to act to "restore" military balance if U.S. quits nuclear arms pact.
• "The world is watching", Kushner tells Saudi crown prince on Khashoggi.
• U.S. Sep National Activity Index, 0.17, 0.18 prev, 0.27 revised.
• CA Aug Wholesale Trade m/m, -0.1%, 0.0% forecast, 1.5% previous, 1.1% revised.
• Saudi to preserve riyal exchange rate stability - central bank chief.
Looking Ahead - Economic Data (GMT)
• No major economic data is scheduled
Looking Ahead - Events, Other Releases (GMT)
• 07:00 Riksbank holds executive board meeting, monetary policy meeting No. 5 in Stockholm
• 10:30 BoE's Andy Haldane launches a seminar of the OECD NAEC (New Approaches to Economic Challenges) Innovation Lab, France
• 12:30 Philadelphia Fed issues its Non manufacturing Business Outlook Survey for October
• 13:30 Minneapolis Fed's Neel Kashkari gives the opening remarks before the "Innovation in Early Childhood Development and K-12 Education" conference in Minneapolis
• 15:20 BoE's Mark Carney speaks at a University of Toronto conference on machine learning in Toronto
• 17:30 Atlanta Fed's Raphael Bostic speaks on the economic outlook and monetary policy before the Committee of 100, in Baton Rouge
• 18:15 Dallas Fed's Robert Kaplan participates in a moderated question-and-answer session before an economic development summit in Galveston, Texas
Currency Summaries
EUR/USD is likely to find support at 1.1430 levels and currently trading at 1.1466 levels. The pair has made session high at 1.1487 and hit lows at 1.1453 levels. The euro slipped lower against the U.S. dollar on Monday as Brexit negotiations with the European Union over Northern Ireland remain in flux and political uncertainty over Italy's budget weighed on euro. Prime Minister Theresa May on Monday said that the majority of Britain's deal to exit the EU has been agreed upon but repeated her opposition to an EU proposal regarding the Irish border, according to excerpts from her statement to Parliament. Sterling was down 0.7 percent in the North American session at $1.297, continuing a slide that began at the start of last week. With just over five months until Britain is scheduled to exit the EU, talks have stalled over a disagreement on the so-called Northern Irish "backstop," an insurance policy to ensure there will be no return to a hard border on the island of Ireland if a future trading relationship is not agreed upon in time. Investors focused on the likelihood of further political uncertainty in Europe over Italy's spending plans, despite a large drop in Italian government borrowing costs. The dollar index, which measures the greenback against a basket of six other currencies, was up 0.38 percent from its close on Friday, last at 96.01.
GBP/USD is supported in the range of 1.2920 levels and currently trading at 1.2698 levels. It reached session high at 1.2988 and dropped to session low at 12954 levels. Britain's pound declined sharply against the dollar on Monday as fears grew that the Irish border issue and disagreements within Britain's ruling Conservatives over Brexit could see Prime Minister Theresa May face a serious leadership challenge.The pound lost ground against the dollar and the euro, at one point falling close to 1 percent to the greenback, though it later clawed back some of the losses. Sunday newspapers quoting unnamed lawmakers as saying May should prepare for a challenge to her leadership. A report by the Telegraph newspaper's deputy political editor said the DUP, the Northern Irish party which props up May's government, would back an amendment proposed by rebel Brexiteer lawmakers that would effectively make the European Union's proposal on the Irish border illegal However, a rebel lawmaker, Steve Baker who had tabled the amendments, was later reported as planning to withdraw the proposal, according to The Times newspaper. Sterling was down 0.65 percent, having earlier hit a low of $1.2957, its weakest since Oct. 4. Against the euro, the pound was down 0.3 percent, well off earlier lows of 88.57 pence which had been a 2 1/2-week low.
USD/CAD is supported at 1.3025 levels and is trading at 1.3125 levels. It has made session high at 1.3125 and lows at 1.3090 levels. The Canadian dollar edged lower against its U.S. counterpart on Monday as the greenback broadly rose and domestic data showed a surprise dip in wholesale trade, while a Bank of Canada interest rate decision was due later in the week. Canadian wholesale trade decreased by 0.1 percent in August from July as weaker sales in the building material and supplies and motor vehicles and parts subsectors led the decline, Statistics Canada reported on Monday. Analysts forecast a 0.2 percent increase. Domestic inflation and retail sales data last Friday also came in weaker than expected. Still, money markets expect the Bank of Canada to raise its key interest rate this week by 25 basis points to 1.75 percent. It would be the fifth hike since July 2017.The U.S. dollar rose against a basket of currencies as the potential of further political uncertainty in Europe over Italy's spending plans weighed on the euro. The Canadian dollar traded 0.2 percent lower at 1.3100 to the greenback. The currency, which touched its weakest in more than five weeks on Friday at 1.3032, traded in a narrow range between 1.3080 and 1.3125.
USD/JPY is supported around 110.87 levels and currently trading at 111.46 levels. It peaked to hit session high at 111.51 and made session lows at 111.13 levels. The dollar gained against the Japanese yen on Monday as rising dollar dented safe heaven appeal. The U.S. dollar rose as the British pound fell on news that Brexit negotiations with the European Union over Northern Ireland remained in flux and as the euro continued its slide on political uncertainty over Italy's budget.Falling stocks boosted demand for low-risk debt, though gains were limited as investors remained on edge with rising inflation pressures and further potential interest rate hikes by the Federal Reserve. Next week's employment report for October will be watched for further indications of rising wage pressures. Annual wage gains dipped to 2.8 percent in September from 2.9 percent in August, which was the biggest advance in more than nine years, though some economists view wage growth as understated, based on anecdotal evidence that worker shortages is forcing companies to raise compensation. This week's economic focus is Friday's reading of gross domestic product for the third quarter.
Equities Recap
European shares fell at the end of a choppy trading session on Monday, as relief over Moody's decision to keep Italy's sovereign rating outlook stable proved short lived and the focus turned to Europe's response to Rome's budget plans.
UK's benchmark FTSE 100 closed down 0.97 percent, the pan-European FTSEurofirst 300 ended the day down by 0.33 percent, Germany's Dax ended down by 0.2 percent, France’s CAC finished the day down by 0.5percent.
The S&P 500 and Dow slipped in choppy trading on Monday following losses in energy and financial stocks, and as caution grew ahead of a slew of earnings this week.
Dow Jones closed down by 0.5 percent, S&P 500 ended 0.44 percent, Nasdaq finished the day up by 1.25 percent.
Treasuries Recap
Longer-dated U.S. Treasury prices edged higher on Monday as falling stocks boosted demand for low risk debt, though gains were limited as investors remained on edge with rising inflation pressures and further potential interest rate hikes by the Federal Reserve.
Benchmark 10-year yields rose 3/32 in price to yield 3.19 percent, down from 3.20 percent on Friday. They are holding below a seven-year high of 3.26 percent reached on Oct. 9.
Commodities Recap
Oil futures were little changed on Monday after paring earlier losses despite Saudi Arabia's pledge to raise crude production to a record high, two weeks before U.S. sanctions potentially choke off Iranian supplies.
Brent crude futures for December delivery rose 5 cents to settle at $79.83 a barrel. West Texas Intermediate (WTI) for November delivery also rose 5 cents to settle at $69.17 on its last day as the U.S. front-month. In intraday trade, WTI fell as low as $68.27, its lowest since Sept. 14.
Gold prices slipped on Monday, pressured by a rallying dollar and the metal's failure to break above a key technical level. Spot gold fell 0.3 percent to $1,222.13.U.S. gold futures fell 0.3 percent to $1,224.80.
Spot gold fell 0.3 percent to $1,222.13 per ounce at 14:46 p.m. EDT (1646 GMT), having hit a 2-1/2-month peak last week at $1,233.26 per ounce.
