Market Roundup
- Dallas Fed Texas January manufacturing activity index -34.6 vs -21.6 in Dec.
- ECB's Draghi: meeting objective about credibility entails concerted action on fiscal policies, structural reforms and reducing the debt overhang.
- Gold and UST prices rise on sliding oil (-5+%)/stocks, amid global growth concerns.
- Qatar sees oil market rebalancing after one more downturn cycle, today's price not sustainable.
- Fresh BOJ stimulus close call.
- BoE's Forbes says oil price fall allows "a bit more time" before rate rise, US & UK labor markets stronger than headline wage growth suggests.
- Bank of England survey shows daily average FX turnover down 21 percent year on year.
Looking Ahead - Economic Data (GMT)
- No Significant Data
Looking Ahead - Events, Other Releases (GMT)
- No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.0800 levels and currently trading at 1.0850 levels. The pair has made session high at 1.0857 and hit lows at 1.0822 levels. The dollar edged down against euro on Monday as renewed selling of crude oil in the market drove investors towards currencies often regarded as less risky investments, such as the euro, Swiss franc and Japanese yen. Investors' focus is on the pace of Federal Reserve monetary tightening as risk aversion and volatile markets push market participants to pare bets on any U.S. near-term rate hikes, and rates are widely expected to be held steady at the conclusion of the Fed's two-day meeting on Wednesday. European Central Bank President Mario Draghi helped normalize sentiment last week when he suggested the bank could add to its stimulus program as early as March.
GBPUSD is supported in the range of 1.4194 and currently trading at 1.4245 levels. It reached session high at 1.4281 and hit low at 1.4226 levels. Sterling slipped lower against US dollar on Monday, as the spotlight was back of potential Brexit from Europe and the prospect of delayed interest rate by Bank of England. The pound has lost almost 6 percent in the last couple of weeks against the dollar as disappointing weak domestic data and worries over global growth have pushed back expectations for when the Bank of England starts raising rates. Further referendum on Britain's European Union membership, increasingly expected to happen this year, have also weighed. Sterling's trade-weighted index was down 0.6 percent at 88.0, and the currency was flat against the dollar at $1.4270, up just 2 cents from the seven-year low of $1.4080 hit last week.
AUDUSD is supported around 0.6910 levels and currently trading at 0.7956 levels. It hit session high at 0.06983 and made session lows at 0.9949 levels. The Australian dollar declined against US dollar on Monday as worries about global growth kept a lid on further gains after a bounce from seven-year lows last week. The Australian dollar held steady at $0.7002, which compares with a peak of $0.7046 on Friday as resistance proved stiff around $0.7050. It rose 2 percent last week, its biggest such gain since October. Financial markets imply an 80 percent chance of a rate cut in Australia to a record low of 1.75 percent by May, with markets worried about the state of the Chinese economy and growth prospects in Europe and Japan. The central bank is widely expected to keep rates on hold but most economists are expecting the tone of the statement to point to more rate cuts ahead.
USD/CAD is supported at 1.4100 levels and is trading at 1.4275 levels. It has made session high at 1.4290 and lows at 1.4216 levels. The Canadian dollar fell against its U.S. counterpart on Monday, trimming last week's gains, as the crude oil price declined after Iranian oil returned to the market. U.S. crude oil prices fell more than 3 percent as Iraq announced record-high oil production. The currency pair rallied 3.0 percent last week after the Bank of Canada surprised many traders by leaving its policy rate on hold at 0.50 percent. However, expectations that the central bank will cut by July has nudged higher to 86 percent. It was 78 percent after much stronger than expected retail sales data on Friday. The focus now shifts to the U.S. Federal Reserve interest rate announcement on Wednesday, as well as the conclusion of the Bank of Japan policy meeting on Friday. The currency's strongest level of the session was C$1.4127, while its weakest level was C$1.4280.
Equities Recap
European shares fell on Monday as Spanish and Italian banks led a decline by banking shares and oil and gas companies lost ground when an oil price rally fizzled out.
UK's benchmark FTSE 100 closed down by 0.03 percent, the pan-European FTSEurofirst 300 ended the day down by 0.73 percent, Germany's Dax ended down by 0.3 percent, France's CAC finished the day down by 0.6 percent.
Wall Street stumbled on Monday after its first positive week of 2016, pulled lower by further weakness in oil prices as energy shares led declines.
Dow Jones closed down by 1.30 percent, S&P 500 ended down by 1.57 percent, Nasdaq finished the day down by 1.59 percent.
Treasuries Recap
U.S. Treasuries prices rose on Monday, with the 30-year bond leading the rally for much of the day, as oil prices fell on swelling oversupply, dragging stocks down and stoking interest in safe-haven U.S. government debt.
The 2-year note was last flat at a yield of 0.873 percent, little changed from 0.869 percent on Friday.
The benchmark 10-year note was last up 8/32 in price to yield 2.020 percent, down from 2.048 percent late on Friday.
The 30-year bond was last up 13/32 in price to yield 2.799 percent, down from 2.821 percent late on Friday.
Commodities Recap
Gold rose 1 percent on Monday as the dollar edged lower on renewed weakness in oil and stock markets, with concerns over the global economic outlook raising questions about the U.S. Federal Reserve's pace of interest rate tightening.
Spot gold was up 0.6 percent at $1,104.95 an ounce at 2:34 p.m. EST (1934 GMT), after rising 1 percent to $1,108.50.U.S. gold for February delivery settled up 0.8 percent at $1,105.30 an ounce.
Oil prices recoiled 6 percent on Monday, again nearing the pivotal $30-a-barrel threshold before the close, after news that Iraq's output reached a record last month returned attention to a market glut that sent prices to 12-year lows last week.
Brent crude, the global benchmark, settled down $1.68 at $30.50 a barrel, 5.2 percent below its closing price on Friday. U.S. crude closed $1.85, or 5.8 percent lower at $30.34 a barrel. That was 16 percent above the 13-year low of $26.19 it touched on Jan. 20.
