Market Roundup
• US Aug Employment Trends, 110.9, 109.9 previous, 109.6 revised.
• U.S. House Republicans target more tax cuts as elections near.
• Pound gains on cautious Barnier Brexit deal comment.
• China vows to respond if U.S. takes new steps on trade.
• UK enjoys fastest growth in almost a year after World Cup and weather boost.
• UK PM's Brexit plans opposed by 80 rebels in her party - former minister.
Looking Ahead - Economic Data (GMT)
• 10 Sep 22:45 New Zealand Aug Electronic Card Retail Sales y/y, 4.5% previous
• 11 Sep 01:30 Australia Aug NAB Business Conditions, 12 previous
Looking Ahead - Events, Other Releases (GMT)
• 07:10 Riksbank First Deputy Governor Kerstin af Jochnick speaks on the current monetary policy at PwC's event Finansdagen, Stockholm.
• 07:20 BoE’s Head of Forex Division Rohan Churm speaks at TradeTech FX Europe, Barcelona, Spain.
• 10:30 British Finance Minister Philip Hammond and his junior ministers take part in a session in parliament, London.
• 12:45 Riksbank Governor Stefan Ingves speaks at an event arranged by Goldman Sachs, London.
Currency Summaries
EUR/USD is likely to find support at 1.1538 levels and currently trading at 1.1595 levels. The pair has made session high at 1.1613 and hit lows at 1.1590 levels. The euro strengthened against dollar on Monday after the European Union's top negotiator said an agreement for Britain to leave the economic bloc might be reached in the coming weeks. Michel Barnier, the European Union's chief negotiator, said an agreement on Britain's exit from the bloc was "realistic in six to eight weeks. Positive picture on Brexit reduced demand for greenback, whose decline was limited by an upbeat U.S. jobs report released on Friday. Investors will also be watching the release of consumer price index data, a key measure of inflation, on Thursday. Expectations of higher inflation rose on Friday after the Labor Department reported the largest annual rise in wages since June 2009.The department reported that average hourly earnings increased 0.4 percent, or 10 cents in August. That raised the annual increase in wages to 2.9 percent in August. The data solidified prospects of a September interest-rate hike. Investors will also be watching the European Central Bank meeting on Thursday, as the bank moves away from unprecedented quantitative easing and towards quantitative tightening. An index that tracks the dollar against the euro, sterling, yen and three other currencies was down 0.24 percent at 95.140.
GBP/USD is supported in the range of 1.2917 levels and currently trading at 1.3026 levels. It reached session high at 1.3050 and dropped to session low at 1.2930 levels. Sterling rose against the dollar on Monday after the European Union's chief negotiator said a Brexit deal was possible "within six or eight weeks" if negotiators were realistic in their demands. For the second time in less than a week, Michel Barnier has signalled his desire to move ahead on the Brexit negotiations, less than seven months before the United Kingdom is slated to leave the European Union on March 29, 2019.Barnier, the EU's chief negotiator, told a forum in Slovenia that "if we are realistic, we are able to reach an agreement on the first stage of the negotiation, which is the Brexit treaty, within six or eight weeks. For a market broadly short on the pound because of worries that Britain will crash out of the EU next year without any sort of formal trading arrangement, Barnier's comments were seized on as signaling that the UK may avoid a disorderly no-deal Brexit. The British currency rallied across the board, rising more than one percent to $1.3052, its highest level in five weeks. It was last trading at $1.3026, up 0.8 percent on the day. Sterling has rallied in recent weeks off lows below $1.27, lifted by recent seemingly favourable comments from Barnier about moving towards a deal.
USD/CAD is supported at 1.3127 levels and is trading at 1.3159 levels. It has made session high at 1.3195 and lows at 1.3150 levels. The Canadian dollar steadied against its U.S. counterpart on Monday as the greenback slipped against a basket of currencies and investors awaited clues on prospects for the NAFTA trade pact. Talks on NAFTA are expected to resume after U.S. Trade Representative Robert Lighthizer travels to Brussels for trade talks with European Union trade commissioner Cecilia Malmstrom on Monday. The loonie has gyrated in recent days on hawkish comments by a senior Bank of Canada, weaker-than-expected domestic jobs data and an uncertain outlook for the North American Free Trade Agreement, but there was little impetus at the start of the week for investors to trade off. The price of oil, one of Canada's major exports, fell after data suggested U.S. crude inventories might build. U.S. crude oil futures settled 0.3 percent lower at $67.54 a barrel. The Canadian dollar was last trading nearly unchanged at C$1.3161 to the greenback. The currency, which touched on Thursday its weakest in nearly seven weeks at C$1.3226, traded in a range of C$1.3153 to C$1.3195.
AUD/USD is supported around 0.7021 levels and currently trading at 0.7109 levels. It hit session high at 0.7131 and made session lows at 0.7096 levels. The Australian dollar hit multi-month lows against its U.S. counterpart on Monday as the risk of a deepening Sino-U.S. tariff dispute spooked investors from trade-exposed currencies. The Aussie dollar huddled at $0.7113, after losing 1.3 percent on Friday as the U.S. dollar surged in the wake of upbeat U.S. jobs data. U.S. President Donald Trump warned on Friday he was ready to slap tariffs on virtually all Chinese imports into the United States, threatening duties on another $267 billion of goods on top of $200 billion in imports primed for levies in coming days.The moves would escalate Trump's trade war with Beijing over his demands for major changes in economic, trade and technology policy. China has threatened retaliation, including action against U.S. companies there. China is Australia's largest export market and the world's biggest buyer of commodities, two reasons investors use the Aussie as a liquid proxy for China plays. The U.S. dollar lost ground after the European Union's top negotiator said an agreement for Britain to leave the economic bloc might be reached in the coming weeks, boosting the euro and sterling.
Equities Recap|
European shares climbed on Monday thanks to a relief rally in Italian stocks and banks after comments from Italy's finance minister eased concerns about his government's spending plans.
UK's benchmark FTSE 100 closed flat, the pan-European FTSEurofirst 300 ended the day up by 0.48 percent, Germany's Dax ended up by 0.3 percent, France’s CAC finished the day up by 0.04 percent.
U.S. stocks mostly edged higher on Monday, with the S&P 500 and Nasdaq rebounding to snap a four-day losing streak, although a drop in Apple Inc kept gains in check.
Dow Jones closed down by 0.22 percent, S&P 500 ended up by 0.21 percent, Nasdaq finished the day down by 0.31 percent.
Treasuries Recap
U.S. government bond yields were steady on Monday at levels reached on Friday, as investors resisted making big trades ahead of Treasury auctions this week, the release of August consumer price index data and a meeting of the European Central Bank.
Yields on Monday were roughly unchanged from Friday, with the 10-year yield down slightly at 2.933 percent from Friday's high of 2.950 percent, its highest since Aug. 9. The 30-year yield was down at 3.085 percent, after also hitting its highest on Friday
since Aug. 9 at 3.110 percent.
Commodities Recap
Gold prices inched higher as hopes of a swift Brexit deal boosted the sterling and the euro against the dollar, making bullion cheaper for buyers in Britain and the euro zone
Spot gold gained 0.1 percent at $1,195.91 per ounce by 1:41 p.m. EDT (1741 GMT), while U.S. gold futures December delivery settled down 60 cents, or 0.1 percent, at $1,199.80 per ounce.
Oil prices were mixed on Monday, pulling back from an early rally after data suggested U.S. crude inventories might build, weighing on the market.
U.S. crude futures were down 20 cents at $67.55 a barrel by 12:32 p.m. EDT (1632 GMT). Brent crude oil was up 30 cents at $77.13 a barrel after earlier touching a high of $77.92 a barrel
