- CFTC IMM CTA data - Speculators cut USD longs in latest week, net JPY shorts down to 90.1k contracts from 105k, EUR shorts to 92.7k from 115k.
- IMF Cottarelli - Premature to speak of China crisis.
- Japan PM Abe - BOJ missing promise to hit 2% CPI target can't be helped given sharp crude price fall, crude price falls good for economy, holds complete trust in BOJ Gov Kuroda's decisions.
- Economic Minister Amari - Expects China economy to settle down but weakness could spread to ASEAN, other Asian economies, China economic transition needed.
- CabSec Suga - Closely monitoring Japan, overseas market moves, Japan economic recovery to continue.
- Japan eyes record debt-servicing costs for FY '16.
- Most major firms see Japan economic growth by year-end.
- UK CBI up '15 growth forecast to 2.6% from 2.4%, '16 to 2.8% from 2.5%, eyes BoE rate hike in Q1 '16.
- Denmark suspension of government bond issuance to continue, government cuts '15, '16 growth forecasts, ups deficit forecasts.
- Russia PM Medvedev - Govt, central bank to make measures to help RUB.
- Swiss open criminal proceedings linked to Malaysia's 1MDB.
- RBNZ Deputy Gov Spencer - Concerned over Auckland housing market, sharp fall in prices could accentuate weakness in macro-economy, low rates contributing but rate hikes ruled out.
- (0830 ET/1230 GMT) US July Chicago Fed national activity index; last 0.08.
Key Events Ahead
- N/A ECB VP Constancio, Praet speeches at Mannheim EEA Congress (to Aug 27).
- N/A Germany E1.5 bln 12-month Bubill, Norway NOK4 bln 3-month t-bill auctions.
- N/A France E3.8-4.2/1-1.4/0.1-0.5/0.5-0.9 bln 3/6/10/12-month BTF auctions.
- N/A UK ChancExch Osborne visit to Finland.
- (0715 ET/1115 GMT) UK ChancExch Osborne, Sweden FinMin Andersson meeting in Stockholm.
- (1555 ET/1955 GMT) Atlanta Fed Lockhart speech at Berkeley, California conference.
FX Recap
EUR/USD is supported above 1.1400 levels and currently trading at 1.1452 levels. It has made intraday high at 1.1498 and low at 1.1369 levels. Euro is trading higher across the major peers. Pair keeps rising as more stop loss orders are being tripped on the way up, with real money rumoured to have been on the offer at 1.1450 prior to the latest spike just a few pips short of 1.15. Today is data thin calendar for the major peers, range bound movement is expected for the time being. Initial support is seen around at 1.1308 and resistance at 1.1526 levels.
USD/JPY is supported around 121.00 levels and posted a high of 122.02 levels. It has made intraday low at 120.73 and currently trading at 121.02 levels. Speaking in the Japanese Parliament on Monday, Japan's Prime Minister Shinzo Abe said that he has full confidence in Bank of Japan (BoJ) Governor Haruhiko Kuroda's handling of monetary policy. Therefore, it is acceptable for the central bank to delay its self-imposed deadline for meeting its inflation target of just below 2% within two years. Abe expressed confidence that Japan's economy remained on a solid recovery path, adding that with oil prices continuing to decline, the BOJ missing the two-year deadline could not be helped. Initial resistance is seen at 123.20 and support is seen at 120.40 levels.
GBP/USD is supported below $1.5700 levels. It made an intraday high at 1.5703 and low at 1.5662 levels. Pair is currently trading at 1.5680 levels. Sterling rose to its highest in seven weeks against the struggling dollar on Friday. The upside in GBP seems to have run out of steam around 1.5720, or multi-week tops, fuelled by the generalized offered tone surrounding the dollar and increasing expectations of a rate hike by the BoE sooner than market currently estimates. Initial support is seen at 1.5413 and resistance is seen around 1.5734 levels.
NZDUSD is supported below 0.6600 levels and trading at 0.6596 levels and made intraday low at 0.6577 and high at 0.6686 levels. A weak consumer confidence index reading for August and a soft rise in job ads last month did little to weigh down the so-called kiwi on last week. Looking ahead market will eye on Inflation expectations data due for release tomorrow for the further directions. Initial support is seen at 0.6465 and resistance at 0.6789 levels.
AUD/USD is supported below 0.7300 levels and trading at 0.7234 levels. It has made intraday high at 0.7322 levels and low at 0.7201 levels. Disappointing manufacturing indicators in China and the latest plunge in Chinese stocks drove volatility in the currency markets on Monday. Emerging market currencies were weaker, with AUD and NZD the biggest losers, while the EUR and JPY outperformed. The Australian dollar fell more than 1% to its fresh 2009 low due to the accelerated risk aversion spurred mainly by sharp declines in Chinese equities and underscored by much weaker-than-expected Chinese manufacturing data. Initial support is seen at 0.7225 and resistance at 0.7647 levels.
Equity Recap
Asian stocks posted steep losses on Monday, with equities in China hit the hardest amid ongoing worries over the world's second biggest economy.
The Shanghai Composite index slumped 8.45% to 3,211.20, while the Hang Seng index in Hong Kong dived 4.73% to 21,349.
In Japan, the Nikkei 225 index fell 3.70% to 18,717.07, and the Topix index slipped 4.40% to 1,503.67.
The Australian S&P/ASX 200 index lost 3.35% to 5,040.10, while South Korea's Kospi index declined 2.45% to 1,830.07
Australia's S&P/ASX 200 index closes down 3.70 pct at 5,021.50 points.
Tokyo's Nikkei average unofficially closes down 4.61 pct at 18,540.68.
Treasury Recap
Indonesia finance minister official says may spend at least 3 trln rupiah on Indonesian government bonds buyback this year.
South Korea central bank says sells 91-day monetary stabilization bonds at yield of 1.54 pct.
US 10-year treasuries yield falls below 2 pct for first time since late April, down 5 bps from Friday.
Thailand 15 bln baht, 28-day Treasury bill average accepted yield 1.40333 pct.
New Zealand government bonds edged up, pushing yields as much as 3 basis points lower across the curve.
Australian government bond futures rallied to four-month highs, with the three-year bond contract up 6 ticks to 98.250. The 10-year contract added 5 ticks to 97.4300.
Commodity Recap
Oil benchmarks suffered from worries on the market related to China, experiencing the lowest levels since the beginning of the crisis. WTI futures dropped 2.30% to trade at $39.52 a barrel on China concerns and the already high global supply. European benchmark Brent followed the bearish trend and declined 1.74% to $44.68 a barrel.
Gold hovered near its highest level in almost seven weeks on Monday as worries over a slowing Chinese economy pushed investors away from risky assets and into those deemed as safe haven. Spot gold was off 0.3 percent at $1,156.80 an ounce by 0539 GMT, after touching a high of $1,165.11 in early deals.
