Market Roundup
• US National Activity Index Aug, -0.31, -0.01 previous.
• US Dallas Fed Mfg Bus Index Sep, 21.30, 17.00 previous.
• Dudley sees Fed rate hikes; inflation weakness 'fading'.
• Fed needs to see prices rise before next rate hike, Evans says.
• Evans says monetary policy still accommodative.
• Canadian PM sees tough NAFTA talks ahead, won't predict timeline.
• Draghi says we can't afford hasty moves in monetary policy.
• N.Korea says US 'declared war,' warns it could shoot down US bombers.
• US Republicans tweak Obamacare repeal bill, support tepid.
• Merkel tries to build coalition after vote that puts far right in parliament.
Looking Ahead - Economic Data (GMT)
• 21:45 New Zealand Trade Imports Aug, 4.55B previous
• 21:45 New Zealand Trade Balance Aug, 85.0M previous
• 21:45 New Zealand Trade Balance YY Aug, -3.21B previous
• 21:45 New Zealand Trade Exports Aug, 4.63B previous
• 01:00 New Zealand NBNZ Business Outlook Sep, 18.3% previous
• 01:00 New Zealand NBNZ Own Activity Sep, 38.2% previous
Looking Ahead - Events, Other Releases (GMT)
• 12:00 ECB’s Praet chairing Jean Monnet Lecture in Frankfurt
• 14:30 Fed’s Lael Brainard speaks in Washington
• 15:50 Fed’s Yellen speaks in Cleveland, Ohio
• 16:30 Fed Atlanta President Raphael Bostic speaks in Atlanta
Currency Summaries
EUR/USD is likely to find support at 1.1800 levels and currently trading at 1.1845 levels. The pair has made session high at 1.1889 and hit lows at 1.1830 levels. The euro slipped lower against the U.S. dollar on Monday after a weekend victory for German Chancellor Angela Merkel that was accompanied by a surge in support for the far right. Support for Merkel's conservatives unexpectedly slumped to its lowest since 1949 and the Social Democrats, partners in the outgoing coalition, said they would go into opposition. The euro was last down more than half a percent against both the dollar and sterling.The euro has been one of the best-performing currencies against the greenback this year, having gained more than 13 percent against the dollar. The news from Germany is likely to refocus investor attention on other political events in Europe, particularly a divisive independence referendum in Catalonia on Oct. 1 and Italian elections next year. While geopolitical worries returned to the forefront on Monday, traders appeared more focused on what Yellen may hint this week about a possible December rate increase than on geopolitical concerns. On Tuesday, Yellen is scheduled to speak on "Prospects for Growth: Reassessing the Fundamentals" at 12:45 p.m. (1645 GMT).
GBP/USD is supported in the range of 1.3373 levels and currently trading at 1.3465 levels. It reached session high at 1.3522 and dropped to session low at 1.3427 levels. Sterling declined against the dollar on Monday with sentiment still sour after Friday's speech by Prime Minister Theresa May failed to offer the details on Brexit that investors had been looking for. Data released late on Friday showed speculators had cut their bets against the pound to the lowest level in almost two years in the week to last Tuesday after the Bank of England signalled it would raise interest rates from record lows in the "coming months. But the pound slipped on Friday, putting in its joint-weakest performance against the euro in seven weeks on Friday, with investors disappointed by the lack of detail on how Britain would ensure that it kept preferential access to the EU's single market after it leaves the bloc. It added to its losses against the dollar on Monday, falling as much as half a percent to $1.3432, its lowest since September 15. Investors are also focused on looming economic data releases, such as Wednesday's GDP numbers, to see whether bets on a Bank of England rate increase in November are justified.
USD/CAD is supported at 1.2250 levels and is trading at 1.2370 levels. It has made session high at 1.2383 and lows at 1.2366 levels. The Canadian dollar lost ground against its U.S. counterpart on Monday as Canadian dollar was under the pressure from geopolitical tensions between the United States and North Korea kept investors on edge. North Korea's foreign minister said President Donald Trump had declared war on the country and it reserved the right to take countermeasures, including shooting down U.S. bombers even if they are not in its airspace. The White House disputed the declaration, calling the suggestion "absurd. Oil prices rose to their highest in eight months after major producers said at a meeting in Vienna the global market was well on its way towards rebalancing. The U.S. dollar climbed against a basket of major currencies after a surge in support for the far right in German elections weighed on the euro. The Canadian dollar was last trading at C$1.2377 to the greenback down 0.31 percent. The currency traded in a range of C$1.2314 to C$1.2387.
USD/JPY is supported around 111.15 levels and currently trading at 111.66 levels. It peaked to hit session high at 112.39 and made session lows at 111.45 levels. The U.S. dollar declined against the Japanese yen on Monday as heightening tensions between North Korea and the United States increased demand for safe-haven Japanese yen. Safe haven buying picked up after North Korea's foreign minister called a Twitter message by U.S. President Donald Trump over the weekend a declaration of war. The Swiss franc, also favored by investors in times of uncertainty, rose against the dollar after the statement. Trump's tweet said the minister and North Korean leader Kim Jong Un "won't be around much longer" if they acted on their threats. The dollar was last down 0.35 percent against the yen at 111.61 yen and 0.25 percent lower against the franc at 0.9666 franc. The dollar index was last up 0.5 percent.
Equities Recap
European shares rose slightly on Monday after German Chancellor Angela Merkel secured a fourth term but saw her party weakened by a surge in support for the far-right.
UK's benchmark FTSE 100 closed down by 0.4 percent, the pan-European FTSEurofirst 300 ended the day up by 0.26 percent, Germany's Dax ended up by 0.02 percent, France’s CAC finished the day down by 0.21 percent.
Wall Street dipped on Monday, as a selloff in technology shares weighed heavily on the Nasdaq, while the most recent statement from North Korea's to Washington added to a cautious tone.
Dow Jones closed down by 0.23 percent, S&P 500 ended down by 0.22 percent, Nasdaq finished the day down by 0.86 percent.
Treasuries Recap
U.S. Treasury yields fell on Monday as concerns about tensions between North Korea and the United States and a surge in support for the far right in Sunday's German election stoked safe-haven demand for U.S. government bonds.
The benchmark 10-year Treasury yield was down 4 basis points at 2.222 percent.
Commodities Recap
Gold prices rose on Monday, reversing earlier losses as geopolitical risks drove safe-haven buying.
Spot gold was up 0.85 percent at $1,308.06 an ounce by 2:48 p.m. EDT (1848 GMT). It fell earlier as the German election results hit the euro.
U.S. gold futures for December delivery settled up $14, or 1.08 percent, at $1,311.50 per ounce.
Oil prices soared more than 3 percent on Monday, with Brent hitting its highest in more than two years, after major producers said the global market was on its way to rebalancing, while Turkey threatened to cut oil flows from Iraq's Kurdistan region toward its ports.
The November Brent crude futures contract settled up$2.16, or 3.8 percent, at $59.02 a barrel, its highest since July 2015.
U.S. West Texas Intermediate crude for November delivery rose $1.56, or 3 percent, to settle at $52.22 a barrel, the highest since April.
