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America’s Roundup: Dollar gains as traders assess rate hike prospects, Wall Street ends higher, Gold rises, Oil prices reach multi-year highs on tight supply-October 26th,2021

Market Roundup

•Canada Wholesale Sales (MoM) 1.1%,0.3% previous

•US Sep Chicago Fed National Activity-0.13, 0.29 previous

•French 6-Month BTF Auction -0.685%, -0.667% previous

•French 3-Month BTF Auction -0.736%, -0.732% previous

•French 12-Month BTF Auction -0.636% ,-0.629% previous

•US Oct Dallas Fed Mfg Business Index  14.6 ,4.6 previous

•US 6-Month Bill Auction 0.060% ,0.060% previous

• US 3-Month Bill Auction 0.055% ,0.055% previous 

Looking Ahead Economic Data (GMT)

•10:30 Japan BoJ Core CPI (YoY) 0.3%

Looking Ahead - Events, Other Releases (GMT)

•No significant events

Currency Summaries

EUR/USD: The euro declined against dollar on Monday as traders looked ahead to European Central Bank on Thursday. Investors are waiting to see whether the European Central Bank on Thursday admits that price pressures are too significant to ignore. They will also want an explanation of what that means for its ultra-easy policy stance. Big decisions on the future of the ECB’s pandemic emergency stimulus will wait until December. But with surging energy prices and supply bottlenecks, Thursday’s meeting should be anything but dull. Immediate resistance can be seen at 1.1624 (9DMA), an upside break can trigger rise towards 1.1652 (50%fib).On the downside, immediate support is seen at 1.1587 (23.6%fib), a break below could take the pair towards 1.1500(Psychological level).

GBP/USD: The British pound edged higher on Monday as British currency benefited from expectations that the Bank of England will raise rates. Money markets are pricing in a rate hike by the central bank at its meeting on Nov. 4.However, data from the UK last week was mixed: PMIs rose as the economy unexpectedly regained momentum in October, but retail sales figures were worse than expected, sending the pound lower at the end of the week. At 0812 GMT, the pound was up 0.2% against the dollar at $1.37845, having fallen below $1.38 after the retail sales miss. Immediate resistance can be seen at 1.3779(5DMA), an upside break can trigger rise towards 1.3829(23.6%fib).On the downside, immediate support is seen at 1.3752(38.2%fib), a break below could take the pair towards 1.3691(50%fib).

USD/CAD: The Canadian dollar weakened against its U.S. counterpart on Monday, as oil gave back its earlier gains and investors weighed the potential for the Bank of Canada to push back against recent moves by the market to price in multiple rate hikes next year. The central bank is due to make an interest rate announcement on Wednesday. It is expected to raise its inflation forecast and to largely end stimulus from its pandemic-era bond buying program. The loonie was trading 0.2% lower at 1.2386 to the U.S. dollar, after trading in a range of 1.2339 to 1.2399. Last Thursday, the currency touched its strongest level in nearly four months at 1.2287. Immediate resistance can be seen at 1.2418(50%fib), an upside break can trigger rise towards 1.2470 (61.8%fib).On the downside, immediate support is seen at 1.2366 (38.2%fib), a break below could take the pair towards 1.2300(23.6%fib).

USD/JPY: The dollar strengthened against yen on Monday as traders looked ahead to tighter U.S. monetary policy even as they bet on the prospect of interest rate hikes happening earlier outside of the United States. Currency markets were broadly quiet at the start of the week with traders awaiting U.S. growth data and central bank meetings in the euro zone, Japan and Canada.  The dollar also chalked up gains versus the Japanese yen, rising 0.2% to 113.68 yen .Strong resistance can be seen at 113.85 (38.2%fib), an upside break can trigger rise towards 114.39(23.6%fib).On the downside, immediate support is seen at 113.33(50%fib), a break below could take the pair towards 112.94(61.8%fib).

Equities Recap

European stocks closed flat on Monday, as gains in banks and commodity-linked sectors were offset by losses in industrial stocks on rising bond yields, and as the outlook for the telecom sector deteriorated.

UK's benchmark FTSE 100 closed up by 0.25 percent, Germany's Dax ended up  by 0.36 percent, France’s CAC finished the day down by 0.31 percent.

U.S. stock indexes edged higher in choppy trade on Monday, led by gains in Tesla and PayPal shares, while investors geared up for earnings reports from heavyweight technology companies this week that could provide direction to the markets.

Dow Jones closed up by  0.25% percent, S&P 500 closed up by 0.54% percent, Nasdaq settled up by 0.90%  percent.

Treasuries Recap

U.S. Treasury yields slipped on Monday in choppy trading, weighed down by market uncertainty about when the Federal Reserve would tighten monetary policy in the face of persistently high inflation.

The U.S. yield curve resumed steepening as investors continued to unwind curve flattening bets, which suggested a looming rate hike by the Fed. The spread between U.S. 5-year notes and 30-year bonds widened to 91.4 basis points  on Monday, from 87.2 basis points late Friday.

Commodities Recap

Gold prices rose about 1% on Monday, as a retreat in U.S. bond yields and persisting worries about inflation lifted the safe-haven asset ahead of major central bank meetings this week.

Spot gold gained 0.8% to $1,805.90 per ounce by 1:43 p.m. ET (1743 GMT). U.S. gold futures for December delivery settled up 0.6% at $1,806.80 per ounce.

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