Market Roundup
• US Oct Durable Goods R MM, -0.8%, -1.2% previous.
• US Oct Factory Orders MM, -0.1%, -0.4% forecast, 1.4% prev 1.7% revised.
• US Oct Durables Ex-Transport R MM, 0.9%, 0.4% previous.
• US Oct Nondef Cap Ex-Air R MM, Oct, 0.3%, -0.5% previous.
• US Oct Factory Ex-Transp MM, 0.8%, 0.7% prev 1.1% revised.
• Irish furore thwarts May bid to clinch Brexit trade deal.
• Bitcoin dips below $11,000 after setting another record high.
• CBOE beats CME to bitcoin futures launch with Dec. 10 start.
• "Ronaldo of finance ministers" becomes new Eurogroup chairman.
• Concerned EU set to assess impact of U.S. tax reform.
• OPEC oil output falls in November to lowest since May.
Looking Ahead - Economic Data (GMT)
• 4 Dec 22:30 Australia Nov AIG Services Index, 51.4 previous
• 5 Dec 00:30 Australia Q3 current account balance, -9.20 bln forecast, -9.60 bln previous
• 5 Dec 00:30 Australia Q3 Net Exports Contribution, 0.25% forecast, 0.30% previous
• 5 Dec 00:30 Australia Oct Retail Sales MM, 0.3% forecast, 0.0% previous
• 5 Dec 01:45 China Nov Caixin Services PMI, 51.2 previous
Looking Ahead - Events, Other Releases (GMT)
• 00:15 RBNZ Acting Governor Grant Spencer speaks in Wellington
• 16:30 Bundesbank President Weidmann and Singapore Deputy PM Shanmugaratnam speak in Frankfurt
Currency Summaries
EUR/USD is likely to find support at 1.1807 levels and currently trading at 1.1851 levels. The pair has made session high at 1.1860 and hit lows at 1.1827 levels. Euro edged lower against the dollar on Monday as the dollar was boosted after the U.S. Senate approved a major tax overhaul over the weekend that aims to cut taxes for businesses, while proposing a mixed package of changes for individual Americans. The Republican tax legislation would be the largest change to U.S. tax laws since the 1980s. Republicans want to add $1.4 trillion over 10 years to the $20 trillion national debt to finance changes that they say would further boost the economy. Talks will begin, likely this week, between the Senate and the House of Representatives, which already approved its own version of the legislation, to reconcile their respective bills. Some market participants, however, were skeptical about how significant the impact would be on U.S. growth. Investors are also focused this week on a key U.S. non-farm payrolls report, with analysts forecasting 200,000 jobs gain for November versus 260,000 the previous month. This would be the last employment report before the Federal Reserve holds its last policy meeting for the year next week and markets have already priced in a rate hike for that meeting. The euro fell against the dollar, down 0.4 percent at $1.1851, pushing the dollar index to trade up 0.4 percent on the day at 93.255.
GBP/USD is supported in the range of 1.3404 levels and currently trading at 1.3462 levels. It reached session high at 1.3573 and dropped to session low at 1.3409 levels. Britain's pound was little changed against the dollar on Monday after European Commission President Jean-Claude Juncker and British Prime Minister Theresa May failed to reach an agreement on a divorce deal. Juncker told reporters that despite significant progress during May's visit to Brussels, two or three open issues remained and "it was not possible to reach a complete agreement". Both sides of the talks in Brussels said they should unlock talks on future trade relations in the coming days. Junker and May spoke after government sources in Dublin said Britain had agreed to keep Northern Ireland "aligned" to EU regulations to avoid a "hard border" with the Irish Republic - news that had sent the pound higher on hopes of rapid trade talks.But that development also provoked an angry response from May's coalition allies in Northern Ireland, the Democratic Unionist Party (DUP), demanding equal treatment with the rest of the United Kingdom. Britain's pound fell around a cent on the news, hitting the day's lows of $1.3415 but it recovered to trade at $1.3473 by 1945 GMT, flat on the day.
USD/CAD is supported at 1.2655 levels and is trading at 1.2700 levels. It has made session high at 1.2715 and lows at 1.2667 levels. The Canadian dollar was nearly unchanged against its broadly firmer U.S. counterpart on Monday, after hitting a five-week high earlier in the session as it added to gains made on Friday following much stronger-than-expected domestic jobs data. The data showing a surge in jobs in November came ahead of a Bank of Canada interest rate decision on Wednesday. The central bank is expected to leave its benchmark interest rate steady at 1 percent. But chances of a hike in January have increased to more than 50 percent from 47 percent before Friday's jobs data. Prices of oil, one of Canada's major exports, fell after U.S. shale drillers last week added more rigs, but still held close to their highest since mid-2015.Canada will continue to explore a free trade agreement with China, Canadian Prime Minister Justin Trudeau said, as it weighs its options after the United States threatened to pull out of the North American Free Trade Agreement. The Canadian dollar was little changed at C$1.2700 to the greenback. The currency's weakest level of the session was C$1.2726, while it touched its strongest since Oct. 25 at C$1.2656.
AUD/USD is supported around 0.7577 levels and currently trading at 0.7592 levels. It hit session high at 0.7605 and made session lows at 0.7577 levels. The Australian dollar held above a recent two-week trough against stronger dollar on Monday as a solid rally in the price of iron ore, the country's top export, and positive economic data supported Australian dollar across the board. Data out on Monday showed Australian firms rebuilt inventories in the third quarter, adding around 0.2 percentage points to economic growth. The data also pointed to higher wages costs for employers, providing a welcome lift to household incomes. Separate data showed job vacancies in the country were at a six-year peak, a sign that Australia's run of strong employment gains could last a while yet. The Aussie was also supported as Dalian iron ore futures jumped for a fourth straight session to the highest since mid-September. Still, the Aussie failed to break above recent ranges as the U.S. dollar towered above most major currencies after the passage of a Senate tax bill over the weekend. The Reserve Bank of Australia (RBA) will hold its last policy meeting of the year on Tuesday when it is widely expected to stay pat on rates. The central bank is expected to keep rates at or near record lows for some time to come due to tepid inflation, weak wage growth and rising household debt.
Equities Recap
European stocks recovered strongly from multi-week lows on Monday after the U.S. Senate passed a tax package delivering significant fiscal stimulus, which investors had anticipated would give extra legs to the bull run in equity markets.
UK's benchmark FTSE 100 closed up by 0.6 percent, the pan-European FTSEurofirst 300 ended the day up by 0.95 percent, Germany's Dax ended up by 1.5 percent, France’s CAC finished the day up by 1.3 percent.
Wall Street ended mixed on Monday, with banks and retailers surging and technology companies tanking as investors adjusted their portfolios in hopes of benefiting from expected corporate tax cuts.
Dow Jones closed up by 0.24 percent, S&P 500 ended down by 0.11 percent, Nasdaq finished the day down by 1.05 percent.
Treasuries Recap
U.S. Treasury yields dropped on Monday but remained higher than their levels late on Friday, boosted by increased confidence that the U.S. Congress would enact tax cut legislation after the Senate passed a bill early Saturday.
The 10-year note was down 5/32 in price, yielding 2.385 percent, up 2 basis points from its Friday close but around 3.5 basis points lower than its Monday opening.
Commodities Recap
Gold prices fell on Monday toward the four-week lows hit last week as the U.S. dollar strengthened after the U.S. Senate approved a major tax overhaul and the market looked ahead to a meeting of the Federal Reserve later this month.
Spot gold was down 0.5 percent at $1,274.16 an ounce by 1:50 p.m. EST (1850 GMT,) not far from last Thursday's $1,270.11, its lowest level since Nov. 6.
U.S. gold futures for February delivery settled down $4.60, or 0.4 percent, at $1,277.70 per ounce.
Oil fell more than 1 percent on Monday on profit-taking as the market eyed signs of rising U.S. production, though prices remained close to recent two-year highs thanks to last week's decision by OPEC and other producers to extend output cuts..
Brent crude futures settled down $1.28, or 2 percent, at $62.45 a barrel. U.S. West Texas Intermediate futuresCLc1 were down 89 cents, or 1.5 percent, at $57.47.
