Market Roundup
• Fed's Fischer: downshift in potential means "not that simple" to raise rates.
• Fed 'very close' to employment, inflation goals – Fischer.
• NY Fed's Empire State business conditions index at lowest since May.
• Empire misses at -6.8, vs forecast for +1.50 and down from -2.0 in Sept.
• U.S. Sept industrial output +0.1%, bang in line with forecast previous month revised down to -0.5% from -0.4%.
• Sterling trade jumped three times on day of "flash crash" -Thomson Reuters
• "Tired of fog? Try the frogs!" Paris tries to poach London business after Brexit.
• Economists trim Brazil 2016 inflation, rate forecasts ahead of expected central bank easing.
• Brazil to ease local content requirements in oil, gas auctions –report.
• Trump ramps up voter fraud claim, digs in against women accusers.
Looking Ahead - Economic Data (GMT)
• 22:30 Australia New Motor Vehicle Sales m/m Sep 0.10% -previous
Looking Ahead - Events, Other Releases (GMT)
• 0030 -- Reserve Bank of Australia will release the minutes of October Monetary Policy Meeting
Currency Summaries
EUR/USD is supported at 1.0959 levels and currently trading at 1.1000 levels. The pair has made session high at 1.1009 and hit lows at 1.0987 levels. The dollar eased against the low-yielding euro on Monday after dollar retreated from seven-month highs as investors evaluated whether the Federal Reserve will let inflation run above target before raising interest rates, and as investors took some profits from the recent dollar rally. Federal Reserve Vice Chairman Stanley Fischer warned that economic stability could be threatened by low-interest rates and noted the central bank is very close to its employment and inflation targets but said it was not that simple for the Fed to raise rates. The comments from Fischer, a dove who has supported a rate hike, come as other Fed officials have recently said the current state of affairs may be about as good as it gets. Conflicting statements on the timing of a rate hike from some Fed officials has been adding to uncertainty in markets, which have been grappling with changing dynamics in a tumultuous U.S. presidential election and nervousness regarding third-quarter earnings.
GBP/USD is supported in the range of 1.2083 levels and currently trading at 1.2181 levels. It reached session high at 1.22001 and dropped to session low at 1.2139 levels. British pound inched higher against the greenback on Monday as some investors took profit following recent dollar rally that received a boost on Friday by Yellen's comments and solid U.S. data. British pound near 20 percent sharp drop since the Brexit vote has sent inflation expectations soaring, driving investors to reassess chances of further easing by the Bank of England this year. Inflation figures on Tuesday mark the next major event. Economists expect consumer prices rose by 0.9 percent in the year to September, up from 0.6 percent in August. Inflation is expected to rise above 2 percent in 2017 because of a sharp fall in the value of the pound. At the same time, the economy is expected to slow as Britain begins the process of leaving the EU and tries to negotiate new trade deals, leaving the economy facing a potentially toxic mix of a tumbling currency, rising yields, accelerating inflation and sluggish growth.
USD/CAD is likely to find support at 1.3092 levels and is trading at 1.3120 levels. It has made intraday high at 1.3162 and lows at 1.3119 levels. The Canadian dollar strengthened against its U.S. counterpart on Monday as dollar rally stalled and investors awaited a Bank of Canada interest rate decision and economic update mid-week. The Canadian currency has strengthened in recent sessions as a stronger U.S. dollar trend against a range of currencies has stalled. Oil prices fell, weighed by oversupply concerns, with a spike in trade volume driving U.S. prices back below $50. The Canadian dollar settled was last trading at C$1.3132 to the greenback, or 76.16 U.S. cents, slightly stronger than Friday's close of C$1.3145, or 76.07 U.S. cents. The Bank of Canada is expected to hold interest rates at 0.50 percent on Wednesday as it waits to see how the economic bounce-back it is anticipating in the second half of the year unfolds.
AUD/USD is supported around 0.7580 levels and currently trading at 0.7632 levels. It hit session high at 0.7629 and made session lows at 0.7638 levels. The Australian dollar edged higher against US dollar on Monday as dollar dipped after investors took profit from recent dollar rally and on comments from Federal Reserve Vice Chairman Stanley Fischer, who said economic stability could be threatened by low-interest rates, but it was "not that simple" for the Fed to raise rates. The Australian dollar was last trading at $0.7631. It is been among the best performing major currencies last week on the back of buoyant commodity prices and a record Australian bond sale that saw heavy offshore interest. The U.S. Federal Reserve is being closely watched for signs it may be ready to hike rates, with its bond yields just off four-month highs.
Equities Recap
European shares fell on Monday as weak-looking business updates from firms such as media group Pearson and Norwegian seafood company Marine Harvest weighed on the market.
UK's benchmark FTSE 100 closed down by 1 percent, the pan-European FTSEurofirst 300 ended the day down by 0.25 percent, Germany's Dax ended down by 0.8 percent, France’s CAC finished the day down by 0.6 percent.
Wall Street ended modestly lower on Monday as energy stocks retreated along with oil prices, while Amazon and Netflix weighed on the consumer discretionary sector.
Dow Jones closed down by 0.29 percent, S&P 500 ended down 0.31 percent, Nasdaq finished the day down by 0.28 percent.
Treasuries Recap
U.S. Treasury yields declined after hitting four-month highs on Monday, as investors sought bargains in bonds whose prices had dropped on Federal Reserve Chair Janet Yellen's remarks last week which suggested that the central bank might tolerate higher inflation.
U.S. benchmark 10-year Treasury notes rose 8/32 in price for a yield of 1.762 percent, down 3 basis points from Friday.
Commodities Recap
The price of gold rose on Monday, partly lifted by steady flows into exchange-traded funds (ETFs) and a dip in the dollar after touching seven-month highs.
Spot gold was up 0.4 percent at $1,255.60 an ounce by 2:30 p.m. EDT (1830 GMT), having fallen nearly 0.6 percent on Friday to a one-week low of $1,247.01.
U.S. gold futures settled up 0.1 percent at $1,256.6 per ounce.
Oil prices settled down on Monday, weighed by oversupply concerns, with a spike in trade volume driving U.S prices below $50, but losses were limited amid a projected drop in American shale output.
International benchmark Brent crude fell 43 cents, or 0.8 percent, from the last settlement to close at $51.52 per barrel, after hitting a session low of $51.16 a barrel.
U.S. West Texas Intermediate (WTI) closed at $49.94 per barrel, down 41 cents, or 0.8 percent, after hitting a session low of $49.47.
