Market Roundup
• Trump tells Iran "never, ever threaten" U.S. or suffer consequences.
• US Jun Existing Home Sales, 5.38 mln, 5.44 mln forecast, 5.43 mln previous, 5.41 mln revised.
• US Jun Existing Home Sales % Change, -0.6%, 0.5% forecast, -0.4% prev, -0.7% revised.
• US Jun National Activity Index, 0.43, -0.15 previous, -0.45 revised.
• CA May Wholesale Trade MM, 1.2%, 0.1% previous, -0.1% revised.
• EU's Juncker will not bring trade offer to Trump talks - Commission.
• Euro zone consumer confidence unchanged in July.
• Britain warns EU: we face "Brexit no-deal by accident" unless you change course.
• Interest rates to be BoE's main policy tool while QE reversed - Broadbent.
• Mexico sees scope for progress in stalled NAFTA talks this week
Looking Ahead - Economic Data (GMT)
• 23 Jul 23:30 Japan Jul Nikkei Mfg PMI Flash, 53.0 previous
Looking Ahead - Events, Other Releases (GMT)
• N/A EU Economic and Financial Affairs Council meeting – Brussels
Currency Summaries
EUR/USD is likely to find support at 1.1575 levels and currently trading at 1.1693 levels. The pair has made session high at 1.1722 and hit lows at 1.1681 levels. The euro declined against dollar on Monday as greenback rebounded on bets that Federal Reserve likely to continue raising interest rates despite criticism from President Donald Trump. A White House official told CNBC on Friday that Trump is concerned the U.S. central bank will raise rates two more times this year. Trump had earlier questioned the Fed's expected pace of hikes in posts on Twitter, saying it takes away from the United States' "big competitive edge" and could hurt the U.S. economy. The Fed is seen as likely to raise rates for the third time this year in September and could be more compelled to continue rate hikes to show its independence as a result of the criticism. The disparity in interest rates between the U.S. and other major economies has been a primary driver of the stronger dollar this year. The dollar index, a measure of the currency against a basket of six rivals, was up 0.22 percent. The greenback rose against the euro to $1.1692, a gain of 0.24 percent. This week’s economic focus will be Friday’s U.S. gross domestic product reading for the second quarter, which will be evaluated for indications on how last year’s tax overhaul and recent trade tariffs are influencing growth.
GBP/USD is supported in the range of 1.3000 levels and currently trading at 1.3096 levels. It reached session high at 1.3133 and dropped to session low at 1.3081 levels. The British pound declined against the greenback on Monday as dollar rebounded after falling on Friday following President Donald Trump comments. British currency rebounded on Friday as the greenback was undermined by U.S. President Donald Trump's comments lamenting the dollar's recent strength, sterling slipped as much as 0.2 percent to $1.3103. Sterling looks set for more volatility, especially if there are signs that support for a "hard" Brexit crashing out of the European Union without a trade deal in place - is gaining ground. A weekend poll revealed Britons were overwhelmingly opposed to Prime Minister Theresa May's recently unveiled Brexit plan and would instead support a new right-wing political party committed to a complete break from the bloc. Markets are now awaiting Brussels's response. The British parliament starts its summer recess this week and markets are now awaiting next week's Bank of England meeting to see if the bank decides to raise rates. Markets currently assign a roughly 70 percent chance of a rate increase despite weaker-than-expected retail sales and softer inflation data published last week.
USD/CAD is supported at 1.3062 levels and is trading at 1.3166 levels. It has made session high at 1.3179 and lows at 1.3127 levels. The Canadian dollar fell against the greenback on Monday as concerns about excess oil supply overshadowed worries about growing tensions between the United States and Iran and evidence of solid domestic economic growth. Lingering concerns about the renegotiation of the North American Free Trade Agreement (NAFTA) also bogged down the loonie. U.S. President Donald Trump said last Wednesday that Washington might hammer out a trade deal with Mexico and then do a separate one with Canada later, while Canada's ambassador to the United States still saw a trilateral agreement. Oil prices fell after earlier gains. Saudi Arabia and other producers could raise production before a November deadline for countries to comply with U.S. sanctions on Iranian crude sales. The loonie registered a 0.1 percent gain against the greenback last week after Trump on Thursday and Friday complained about a strong greenback and the rise in U.S. interest rates. The U.S. dollar was up 0.2 percent against its Canadian counterpart at C$1.3172 after falling as low as C$1.311.
AUD/USD is supported around 0.7339 levels and currently trading at 0.7381 levels. It hit session high at 0.7385 and made session lows at 0.7369 levels. The Australian dollar slipped lower against dollar on Monday as greenback rebounded following a dip last week sparked by public comments from U.S. President Donald Trump advocating a weaker greenback. The U.S. currency has been under pressure since Trump last week said he was concerned about the potential impact of a stronger dollar on American exports. He also broke convention by criticizing Federal Reserve policy on raising interest rates, saying it takes away from the United States’ "big competitive edge. The Aussie also declined against the Japanese yen which got a boost from a report the Bank of Japan might tinker with its massive asset-buying campaign to make it more "sustainable" in the face of stubbornly low inflation. The BOJ, facing stubbornly low inflation, is in unusually active discussions, with changes to its interest-rate targets and stock-buying program on the table, people familiar with the central bank's thinking. The Aussie dollar was last trading down at $0.7381, declining from $0.7438 Friday’s high. The main domestic event this week will be Australia's second-quarter inflation report on Wednesday. Median forecasts are for consumer price inflation to pick up to 2.2 percent, in part due to higher petrol costs.
Equities Recap
European shares fell on Monday in a broad-based pullback led by declines in Ferrari and Fiat Chrysler after deteriorating health forced Fiat's CEO to quit, while a disappointing earnings update sent Ryanair sharply lower.
UK's benchmark FTSE 100 closed down by 0.3 percent, the pan-European FTSEurofirst 300 ended the day down by 0.20 percent, Germany's Dax ended down by 0.1 percent, France’s CAC finished the day down by 0.5 percent.
The S&P 500 rose on Monday as a jump in 10-year bond yields boosted financials and investors anticipated continued strength in corporate earnings and U.S. economic growth.
Dow Jones closed down by 0.05 percent, S&P 500 ended up by 0.18 percent, Nasdaq finished the day up by 0.26 percent.
Treasuries Recap
Benchmark 10-year U.S. Treasury yields rose to their highest in five weeks on Monday as the Federal Reserve was seen as likely to continue raising interest rates despite criticism from President Donald Trump.
Benchmark 10-year Treasury notes fell 18/32 in price to yield 2.960 percent, the highest since June 14 and up from 2.893 percent on Friday. The yield curve between two-year and 10-year notes expanded to 33 basis points, its steepest since June 29.
Commodities Recap
Oil prices edged lower on Monday as the focus turned to oversupply worries, moving away from escalating tensions between the U.S. and Iran, which had driven prices higher early in the session.
Brent crude oil settled down 1 cent at $73.06 a barrel. U.S. crude was down 37 cents at $67.89 a barrel, down from a session high of $69.31.
Gold prices fell toward one-year lows on Monday as the U.S. dollar held on to strength against the currencies of key bullion consumers China and India.
Spot gold was down 0.5 percent at $1,224.67 an ounce by 2:36 p.m. EDT (1836 GMT), close to last Thursday's low of $1,211.08, while U.S. gold futures for August delivery settled down 0.4 percent at $1,225.60.
