Market Roundup
• US factory orders +1.2% v 1% forecast, 1.3% previous; rise for second straight month.
• US Durable goods ex-defence Jan 1.6% v 1.5% previous.
• US non-defense Cap ex-air -0.1% v -0.4% previous.
• Germany’s Merkel: We need to have the courage to have a Europe of different speeds otherwise we might get stuck.
• Germany’s Al-Wazir warns UK over trade, predicts Frankfurt to gain in euro trading; says UK should not expect generous trade deals.
• Macron closes gap with Le Pen in first round of French election - Ifop Fiducial poll.
• Global negative-yielding sovereign debt fell to USD8.6 trillion vs 9.1 trillion on Dec 29 – Fitch.
• China to maintain exchange rate policy framework to keep yuan stable- central bank deputy gov.
• Mexico places USD1 billion of new peso hedge, demand for USD2 billion.
Looking Ahead - Economic Data (GMT)
• 22:30 Australia AIG Construction Index Feb 47.7-previous
• 23:50 Japan Foreign Reserves Feb 1231.60b- previous
Looking Ahead - Events, Other Releases (GMT)
• 03:30 Australia RBA Cash Rate* Mar forecast 1.5%, 1.50%- previous
Currency Summaries
EUR/USD is likely to find support at 1.0538 levels and currently trading at 1.0584 levels. The pair has made session high at 1.0607 and hit lows at 1.0573 levels. Euro declined against the dollar on Monday as the dollar strengthened across the board after former French prime minister ruled out standing in the country's presidential elections, a development seen as likely boosting the chances of anti-European Union candidate Marine Le Pen. Alain Juppe, who served as France's prime minister from 1995 to 1997, announced earlier Monday he would not seek the country's presidency. A poll on Friday had shown that if Juppe replaced the scandal-hit Francois Fillon as the center-right candidate, he would likely win the election's first round, with centrist candidate Emmanuel Macron coming second a scenario that would knock Le Pen out of the race. The news sent the euro 0.2 percent lower to $1.0597, down from a two-week high it touched earlier in the day. Investors were also digesting last week's sharp spike in yields spurred by a barrage of remarks from Federal Reserve officials including Fed Chair Janet Yellen, which led traders to anticipate that the U.S. central bank will raise interest rates by a quarter of a percentage point at its policy meeting next week.
GBP/USD is supported in the range of 1.2214 levels and currently trading at 1.2236 levels. It reached session high at 1.2241 and dropped to session low at 1.2526 levels. Sterling slipped lower against the U.S. dollar on Monday as sterling was weighted down by uncertainty over when the formal mechanism for Britain's departure from the European Union would be triggered, as well as a run of weak UK data. The British parliament's upper house will on Tuesday try to force the government to give lawmakers a greater say over the terms of Brexit, when they vote on the wording of legislation that gives Prime Minister Theresa May the right to trigger Brexit talks. Tuesday’s vote will also demand that both houses of parliament be asked to approve any decision to leave the bloc without a deal if talks fail. But regardless of Tuesday's outcome, May's Brexit bill will then be passed back to lawmakers in the lower house for approval, because last week it was amended to add a condition on protecting the rights of EU citizens in Britain. Sterling fell 0.6 percent to $1.2230, close to a seven-week low, with the greenback boosted by revised expectations for when U.S. interest rates will rise. Investors are now pricing in an 87 percent chance rates will rise in March.
USD/CAD is supported at 1.3232 levels and is trading at 1.3273 levels. It has made session high at 1.3293 and lows at 1.3081 levels. The Canadian dollar declined against its U.S. counterpart on Monday after falling more than 2 percent last week, but was trading in a narrow range ahead of upcoming domestic trade and employment data. Recent losses for the loonie came as Federal Reserve Chair Janet Yellen cemented the view that the Fed will raise interest rates at its March 14-15 meeting. Recent losses for the loonie came as Federal Reserve Chair Janet Yellen cemented the view that the Fed will raise interest rates at its March 14-15 meeting. Oil prices see-sawed after Iraq's oil minister said the Organization of the Petroleum Exporting Countries would likely need to extend its production cuts into the second half of 2017.Crude has been range-bound for more than 60 days, constrained by concerns that U.S. output may counter OPEC's agreement to reduce output during the first half of the year. The focus will also be on exports, where volumes were disappointing in January. Canada's employment report for February is due on Friday. The Canadian dollar was trading at C$1.3393 to the greenback, or 74.67 U.S. cents, slightly weaker than Friday's close of C$1.3379, or 74.74 U.S. cents.
AUD/USD is supported around 0.7541 levels and currently trading at 0.7581 levels. It hit session high at 0.7606 and made session lows at 0.7573 levels. Australian dollar declined against greenback on Monday as the mounting risk of an imminent hike in U.S. interest rates eroded the currencies' yield advantage over the U.S. dollar. The Aussie was off 0.25 percent at $0.7581 and uncomfortably close to a recent one-month trough of $0.7543. The currency shed almost 1 percent last week as the U.S. Federal Reserve surprised many by highlighting the chance of a rate hike this month. In contrast, the Reserve Bank of Australia (RBA) has recently underlined the outlook for no change in its current record-low cash rate of 1.5 percent. The central bank holds its March policy meeting on Tuesday is considered certain to stay on hold. On the data front, Australian retail sales rebounded in January after two months of tepid outcomes, although the underlying pulse was one of sluggish household consumption as record-low wages growth eats into spending power. Data from the Australian Bureau of Statistics out on Monday showed retail sales rose 0.4 percent in January, in line with market forecasts and up from a 0.1 percent fall in December.
Equities Recap
European shares pulled back on Monday with banking stocks led lower by a slump in Deutsche Bank shares after the German heavyweight lender unveiled an 8 billion-euro cash call as part of a major reorganisation.
UK's benchmark FTSE 100 closed down by 0.3 percent, the pan-European FTSEurofirst 300 ended the day down by 0.54 percent, Germany's Dax ended down by 0.2 percent, France’s CAC finished the day down by 0.6 percent.
U.S. stocks pulled back on Monday in a broad decline as investors grew uneasy over the latest tumult surrounding the Trump administration and geopolitical tensions emanating from North Korea.
Dow Jones closed down by 0.23 percent, S&P 500 ended down by 0.32 percent, Nasdaq finished the day down by 0.24 percent.
Treasuries Recap
U.S. Treasury yields were steady in a tight trading range on Monday with two-year yields holding below a 7-1/2-year peak, as investors made room for this week's hefty sale of government and corporate bonds.
The benchmark 10-year Treasury yield was little changed at 2.494 percent, while the 30-year bond yield rose 2 basis points to 3.101 percent.
The two-year yield, which is most sensitive to traders' view on Fed policy, edged up marginally to 1.309 percent. It hit 1.345 percent on Friday, which was its highest intraday level since August 2009.
Commodities Recap
Oil prices whipsawed on Monday, with benchmark Brent rising and U.S. crude easing slightly, after the market pushed higher early in the day on the Iraqi oil minister's comments that cuts might persist into the second half of the year.
U.S. West Texas Intermediate crude settled down 13 cents at $53.20 a barrel.
Brent crude settled up 11 cents at $56.01 a barrel.
Gold fell for the third straight session on Monday, but hovered above Friday's two-week low, pressured by comments from Federal Reserve Chair Janet Yellen that reinforced expectations of an increase to U.S. interest rates this month.
Spot gold was down 0.6 percent at $1,226.61 an ounce by 3:09 p.m. EST (2009 GMT), having slid on Friday to $1,222.51, the lowest since Feb. 15. U.S. gold futures settled down 0.08 percent at $1,225.50.
