Market Roundup
• Wall St extends run as "Trump trade" reignites, Trump has promised major tax announcement in coming weeks.
• Citing Trump and Brexit, EU sees euro zone economy risk, sharp drop in UK growth.
• Germany’s Merkel: Europe can only be strong if Germany, France prosper.
• French Finance Minister Sapin: ECB never tries to manipulate euro rate; euro move freely and the ECB made its monetary policy decisions independent of member countries.
• IMF's Lagarde: worried about Europe elections; insisted the Eurozone was making progress in resolving its econ issues.
• OPEC reports big Saudi oil cut, boosting compliance with the deal, OPEC output falls 890k bpd in Jan, led by Saudi.
• Trump and Trudeau agree to disagree on immigration, NAFTA.
Looking Ahead - Economic Data (GMT)
• 21:45 New Zealand Election Card Retail Sales month Jan -0.1%-previous
• 21:45 New Zealand Election Card Retail Sales YY* Jan 5.8%- previous
• 23:50 Japan GDP QQ Q4 forecast 0.3%, 0.3%- previous
• 23:50 Japan GDP QQ Annualised Q4 forecast 1.1%, 1.3%- previous
• 23:50 Japan GDP QQ Private Consumption Prelim Q4 forecast 0%, 0.3%- previous
Looking Ahead - Events, Other Releases (GMT)
• No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.0591 levels and currently trading at 1.0599 levels. The pair has made session high at 1.0624 and hit lows at 1.0592 levels. Euro declined against the dollar on Monday as the dollar was lifted by increased hopes of U.S. tax cuts to stoke corporate profits and investments as well as bets on whether the Federal Reserve might raise interest rates more quickly. The greenback last week booked its strongest gain since mid-December after U.S. President Donald Trump on Thursday promised a tax plan that the White House said would include tax cuts for businesses and individuals. Investors hope that signals that the focus of day-to-day remarks by Trump and his aides is shifting away from trade protectionism and security, and toward economic growth. The dollar index, which measures the greenback against six other currencies, reached 101.07, its strongest level since Jan. 20. It was last up 0.2 percent at 101.04. Investors are focused on testimony by Fed Chair Janet Yellen before Congress on Tuesday and Wednesday in the wake of hints from other policy-makers who are leaning toward more hikes in interest rates this year than the two currently priced in by markets prompted by signs of looser fiscal policies.
GBP/USD is supported in the range of 1.2432 levels and currently trading at 1.2527 levels. It reached session high at 1.2530 and dropped to session low at 1.2479 levels. Sterling inched higher against the U.S. dollar on Monday as political and economic uncertainties in the United States and Europe provided support to British Pound. Pound was also supported by last week's better-than-expected manufacturing and trade data and figures this week will show how inflation and confidence among Britain's shoppers are holding up. British manufacturing output rose 2.1 percent in December, figures showed last week, far higher than the 0.5 percent rise forecast. And compared with December 2015, it was up 4.0 percent, the strongest increase since April 2014.Sterling inched back above $1.25 against the dollar but climbed a more forceful 0.5 percent against the euro to take it to a two-week high of 84.80 pence and putting the start of the year's 84.50 pence marker in its sights. UK-focused investors meanwhile will be watching British inflation data on Tuesday and retail sales figures on Thursday following some mixed signals in recent weeks.
USD/CAD is supported at 1.3030 levels and is trading at 1.3068 levels. It has made session high at 1.3116 and lows at 1.3051 levels. The Canadian dollar strengthened against the greenback on Monday after Canadian Prime Minister Justin Trudeau and Trump opened talks at the White House. President Donald Trump said the United States will be tweaking its trade relationship with Canada, stopping short of calling for a major realignment in a development likely to please visiting Canadian Prime Minister Justin Trudeau. The dollar was up 0.14 percent against a basket of major currencies, after touching its highest level in almost three weeks, on expectations the reflationary policies would stoke economic growth and the possibility the Fed could be more aggressive in hiking interest rates. The loonie weakened 0.4 percent last week after having posted a recent four-month high of C$1.2969. Some of last week's losses were pared after data on Friday showed a surge in domestic jobs. The Canadian dollar last traded at C$1.3072 to the greenback, slightly stronger than Friday's close of C$1.3085.
AUD/USD is supported around 0.7605 levels and currently trading at 0.7643 levels. It hit session high at 0.7654 and made session lows at 0.7630 levels. The Australian dollar declined against US dollar on Monday as the Aussie bulls ran out of strength again at the crucial 77 U.S. cents barrier after repeatedly failing to breach the key chart resistance point and amid broader greenback strength. The Australian dollar was last trading at $0.7647, after rising as far as $0.7689 on Friday when it climbed 0.7 percent. The currency pair has traded in a sideways direction since the beginning of February, failing repeatedly at the $0.7700 mark. Analysts expect the currency pair will continue to struggle for direction ahead of key economic data release later this week. However, the Aussie is already up more than 6.5 percent this year thanks to resurgent iron ore, Australia's biggest export earner, and on an upbeat assessment of the economy by the country's central bank. A string of recent data also showed the A$1.6 trillion economy likely averted a recession in the December quarter after a shock contraction in the third quarter of last year. Technical analysts predict a breach above $0.7700 could see the Aussie hitting $0.7740 and then $0.7770/80.
Equities Recap
European shares gained on Monday as mining stocks touched a 2 1/2-year high on rising copper prices and mergers and acquisitions continued to drive shares, with takeover offers sending German drugmaker Stada to a record high.
UK's benchmark FTSE 100 closed up by 0.4 percent, FTSEurofirst 300 ended the day up by 0.87 percent, Germany's Dax ended up by 1 percent, and France’s CAC finished the day up by 1.4 percent.
U.S. equity indexes hit record intraday highs on Monday, with the benchmark S&P 500's market capitalization topping $20 trillion as investors bet tax cuts promised by President Donald Trump would boost the economy.
Dow Jones closed up by 0.70 percent, S&P 500 ended up 0.52 percent, Nasdaq finished the day up by 0.50 percent.
Treasuries Recap
U.S. Treasury yields rose on Monday as investors looked ahead to testimony by Federal Reserve Chair Janet Yellen on Tuesday and Wednesday and as record, high stock markets reduced demand for bonds.
Benchmark 10-year notes fell 7/32 in price to yield 2.43 percent, up from 2.41 percent late on Friday.
Commodities Recap
Gold prices slipped on Monday as the dollar rose and equities climbed, but political and economic uncertainties in the United States and Europe are expected to provide support for now.
The spot price was down 0.7 percent at $1,225.71 an ounce by 2:51 p.m. EST (1951 GMT), falling further below last week's three-month high of $1,244.67. U.S. gold futures settled down 0.8 percent at $1,225.80.
Oil prices declined on Monday by about 2 percent, the most since mid-January, pressured by a stronger dollar and signs of rising U.S. crude output.
International benchmark Brent crude futures settled down 2 percent at $55.59 per barrel and U.S. crude settled 1.7 percent lower at $52.93.
