Market Roundup
• Trump says popular retirement savings program unscathed in tax plan.
• Trump says he is "very, very close" to making Fed chair decision.
• CA Wholesale Trade MM Aug, 0.5%, 0.5% forecast, 1.7% previous.
• November rate rise is "open question", BoE's Cunliffe says.
• Trump to press China on North Korea, trade on Beijing visit.
Looking Ahead - Economic Data (GMT)
• 01:30 Japan Nikkei Mfg PMI Flash Oct, 52.9 previous
Looking Ahead - Events, Other Releases (GMT)
• 07:00 ECB’s Praet speaks at the ECB conf. in Frankfurt, Germany
• 17:30 ECB’s Nouy speaks at the Centre for European Law organized by King's College, London
• N/A EU Employment, Social Policy, Health and Consumer Affairs Council meeting
Currency Summaries
EUR/USD is likely to find support at 1.1700 levels and currently trading at 1.1740 levels. The pair has made session high at 1.1763 and hit lows at 1.1723 levels. The euro declined against the U.S. dollar on Monday as anxiety about Madrid's handling of civil unrest in Catalonia following a referendum on the region's independence on Oct. 1 weighed on the single currency. Catalonia said on Monday it was confident all officials including police would defy attempts by Madrid to enforce the direct rule in the region, in an escalating dispute that has raised fears of unrest among Spain's European allies. The Spanish government has invoked special constitutional powers to fire the regional government and force a new election to counter an independence drive that has rattled the economy. A vote in the Senate to implement direct rule is due on Friday. But the leaders of the secessionist campaign said a disputed referendum on Oct. 1 gave them the mandate to claim independence from the rest of Spain. The assembly will meet on Thursday to agree on a response to the direct rule. Several influential Catalan newspapers called on Puidgemont on Sunday to resolve the crisis by calling a snap election before the direct rule becomes effective. However, Catalan government spokesman Jordi Turull said this was not an option.It is not clear whether a vote in the region would help resolve the crisis. The dollar index was last up 0.22 percent at 93.910, below a session peak of 94.017.
GBP/USD is supported in the range of 1.3128 levels and currently trading at 1.3197 levels. It reached session high at 1.3214 and dropped to session low at 1.3166 levels. Britain's pound strengthened against the dollar on Monday, with any optimism around progress in Brexit talks being overshadowed by a dollar boosted by speculation about a more hawkish chair of the U.S. Federal Reserve. British Prime Minister Theresa May said on Monday she was "ambitious and positive" about the country's future and its negotiations to leave the European Union, describing the talks as being conducted in a "constructive spirit". Sterling had recovered from an 11-day low against the dollar on Friday on tentative signs of progress in talks over Britain's departure from the European Union, after EU leaders said they would begin preparations to move into the second phase of discussions in December. But after building on those gains in early trade, climbing to $1.3212, the pound later slipped back as attention turned to the nomination of the next Fed chair, despite May's assurances. Investors are eyeing third-quarter GDP data for Britain due on Wednesday for clues on the health of the economy and the likelihood of a Bank of England interest rate hike following its next policy meeting on Nov. 2.By 1925 GMT it was trading flat on the day at $1.3190, with most analysts saying sterling was largely being driven by the dollar's moves.
USD/CAD is supported at 1.2610 levels and is trading at 1.2651 levels. It has made session high at 1.2660 and lows at 1.2633 levels. The Canadian dollar slipped lower against its U.S. counterpart on Monday after a big fall to end last week, as investors wait for a rate decision from the Bank of Canada. The Canadian dollar was trading at C$1.2643 to the greenback, or 79.13 U.S. cents, down 0.1 percent and at its weakest level since late August. The currency had fallen by the most in nine months on Friday as a drop in domestic retail sales bolstered expectations that the central bank would hold steady at a policy announcement on Wednesday after two hikes so far this year. The greenback has meanwhile been boosted by progress on U.S. tax reforms that raised the prospects of a fiscal lift to its economy. The European Central Bank is also due to make a closely-watched policy announcement this week in which it is expected to start trimming its monthly asset purchases. Prices for oil, a major Canadian export, were steady, with U.S. crude up 0.14 percent at $51.91 a barrel and Brent down 0.35 percent at $57.55.
NZD/USD is supported around 0.6930 levels and currently trading at 0.6965 levels. It hit session high at 0.6975 and made session lows at 0.7956 levels. The New Zealand declined against the dollar on Monday on concerns the incoming Labour coalition would introduce curbs on immigration and foreign investment. The New Zealand currency fell for a fifth straight day to $0.6966, a level not seen since May 22.The kiwi has tumbled 5.4 percent since an inconclusive election on Sept. 23 left the country's two major parties reliant on the nationalist New Zealand First to form government.NZ First leader Winston Peters ended the speculation last week when he announced he would back the Labour Party, which had been in opposition for the last decade. Kiwi bulls have been inconsolable since, as the Labour-NZ First coalition represents an abrupt shift in the country's open door policy that has helped fuel strong economic growth in recent years. Already, incoming prime minister Jacinda Ardern has put a roadblock on New Zealand's participation in the Trans-Pacific Partnership insisting she will push for changes to the agreement due to be finalised next month.
Equities Recap
European shares edged higher on Monday, though banks weighed and Madrid's bourse lagged peers as Catalonia's political crisis deepened.
UK's benchmark FTSE 100 closed flat, the pan-European FTSEurofirst 300 ended the day up by 0.14 percent, Germany's Dax ended up by 0.1 percent, France’s CAC finished the day up by 0.4percent.
U.S. stocks ended down on Monday, retreating from their recent run of record highs, as technology and industrial shares declined.
Dow Jones closed down by 0.22 percent, S&P 500 ended down 0.38 percent, Nasdaq finished the day down by 0.68 percent.
Treasuries Recap
U.S. Treasury debt prices inched higher on Monday in thin volume, tracking gains in the European bond market, as investors added to positions after a sell-off over the last few days and ahead of this week's debt auctions and a European Central Bank monetary policy meeting.
In late trading, 10-year U.S. Treasury note prices were up 1/32, yielding 2.375 percent, down from Friday's 2.381 percent.
U.S. 30-year bond prices rose 3/32, with a yield of 2.888 percent, down from 2.894 percent last Friday.
U.S. two-year note yields, meanwhile, were at 1.568 percent, also down from 1.576 percent on Friday.
Commodities Recap
Gold prices touched an over two-week low on Monday before paring losses as chart signals helped offset pressure from a stronger dollar and an early advance in equities.
Spot gold was down 0.01 percent at $1,280.43 per ounce by 2:53 p.m. EDT (1853 GMT), paring losses on a flurry of technical buying after hitting its lowest since Oct. 6 at $1,271.86.
U.S. gold futures for December delivery settled up $0.40, or 0.03 percent, at $1,280.90 per ounce.
Oil prices were little changed on Monday as supply disruptions in Iraq dented exports by OPEC's second-largest producer and U.S. drilling rates showed a slowdown.
Brent crude settled at $57.37 a barrel, down 38 cents. U.S. West Texas Intermediate (WTI) crude ended the session up 6 cents at $51.90 a barrel.
