Market Roundup
• U.S. firms warn next China tariffs to cost Americans from cradle to grave.
• China defies U.S. pressure as EU parts ways with Iranian oil.
• Erdogan invokes patriotism, Islam as lira remains under pressure.
• Fed's Bostic still expects one more rate increase in 2018.
• New outcry over Trump's revocation of Brennan security clearance.
• With inflation soaring, Venezuela prices shed five zeros.
• Jury weighs ex-Trump aide Manafort's fate for third day.
Looking Ahead - Economic Data (GMT)
• No major economic events are scheduled
Looking Ahead - Events, Other Releases (GMT)
• No major events are scheduled
Currency Summaries
EUR/USD is likely to find support at 1.1363 levels and currently trading at 1.1466 levels. The pair has made session high at 1.1468 and hit lows at 1.1414 levels. The euro rose higher against US dollar on Monday as U.S. currency weakened against the euro during the North American session as investors unwound risk-off trades made earlier in the day, which had boosted the dollar due to its appeal as a perceived safe-haven investment. Dollar also dipped as Trump showed his displeasure with Fed tightening. U.S. President Donald Trump said on Monday he was "not thrilled" with Federal Reserve Chairman Jerome Powell for raising interest rates and accused China and Europe of manipulating their respective currencies. Trump, who nominated Powell last year to replace former Fed Chair Janet Yellen, told in an interview that he believed the U.S. central bank should be more accommodating. The dollar also had gained early in the North American session ahead of trade talks between the United States and China, due this week, which investors hope will ease tensions between the world's two biggest economies. Traders are also preparing for the release of Federal Reserve policy meeting minutes on Wednesday and an annual Jackson Hole symposium for insights into the likely direction of U.S. monetary policy.
GBP/USD is supported in the range of 1.2723 levels and currently trading at 1.2782 levels. It reached session high at 1.2789 and dropped to session low at 1.2754 levels. Sterling strengthened against the dollar on Monday but was still near 14-month lows reached last week on concerns about forthcoming talks that may decide whether Britain gets a trade deal with the EU before it quits the bloc. The pound has suffered six straight weeks of losses against the dollar, its worst run since 2014, even though data such as retail sales suggest the UK economy is holding up. But on Monday the currency was up 0.2 percent at $1.2794, near a 14-month low of $1.2662 hit last Wednesday. It was also up 0.1 percent versus the euro at 89.64 pence per euro. With less than eight months to go until Britain leaves the EU, the government has yet to agree with Brussels the terms of its departure, and some hedge funds have started betting against the currency. Analysts say sterling, which has shed 12 percent of its value since April, will remain vulnerable to the vagaries of Brexit negotiations in the months ahead. Investors will be closely watching this week's trade talks between the United States and China, for clues to whether the two countries can resolve an escalating tariff war that threatens to engulf all trade between the world's two largest economies.
USD/CAD is supported at 1.3000 levels and is trading at 1.3052 levels. It has made session high at 1.3091 and lows at 1.3045 levels. The Canadian dollar strengthened to hit 10-day high against its U.S. counterpart on Monday as oil prices climbed and U.S. President Donald Trump said he disagreed with the U.S. Federal Reserve's decision to raise interest rates. The U.S. dollar fell against a basket of major currencies as Trump showed his displeasure with Fed tightening. The price of oil, one of Canada's major exports, rose as investors grew more concerned about an expected fall in supply from Iran because of U.S. sanctions and worried less that a trade war between the United States and China would hurt economic growth. Canadian dollar strengthened on Friday after data showing that Canada's annual inflation rate surged to 3.0 percent in July, its highest level in nearly seven years. The acceleration in inflation raised expectations that the Bank of Canada might raise interest rates again as soon as next month. The Canadian dollar was trading 0.1 percent higher at C$1.3050 to the greenback, or 76.63 U.S. cents. The currency touched its strongest level since Aug. 10 at C$1.3046.
AUD/USD is supported around 0.7381 levels and currently trading at 0.7435 levels. It hit session high at 0.7439 and made session lows at 0.7390 levels. The Australian hovered near 1-1/2 week highs against its U.S. counterpart on Monday as planned Sino-U.S. trade talks spurred hopes that tensions between the giants may soon ease. The Australian dollar was last trading at $0.7328, the highest since Aug. 10. The Aussie gained 0.3 percent last week in spite of touching its weakest level since January 2017, at $0.7203, on Wednesday. However, domestic politics could prove an overhang as a poll showed support for Prime Minister Malcolm Turnbull falling to its lowest since December, stoking speculation he could face a leadership challenge in his ruling centre-right coalition. Investors were also focused on trade policy, with China and the United States due to hold lower-level trade talks this month, offering hope that they might resolve an escalating tariff war that threatens to engulf all trade between the world's two largest economies. The Wall Street Journal reported that the talks in Washington would take place on Wednesday and Thursday, just as new U.S. tariffs on $16 billion of Chinese goods take effect, along with retaliatory tariffs from Beijing on an equal amount of U.S. goods.
Equities Recap
Hopes that the United States and China might find a compromise to resolve their trade dispute lifted European shares on Monday, while Turkey's currency crisis showed no immediate sign of worsening.
UK's benchmark FTSE 100 closed up 0.6 percent, the pan-European FTSEurofirst 300 ended the day up by 0.64 percent, Germany's Dax ended up by 1.1 percent, France’s CAC finished the day up by 0.7 percent.
Wall Street's major indexes rose on Monday on optimism over trade talks between the United States and China, though they fell from session highs after President Donald Trump criticized the Federal Reserve's raising interest rates.
Dow Jones closed up by 0.35 percent, S&P 500 ended up by 0.24 percent, Nasdaq finished the day down by 0.06 percent.
Treasuries Recap
U.S. Treasury yields fell to six-week lows on Monday as investors waited on minutes from the Federal Reserve's August meeting on Wednesday and a speech by Fed Chairman Jerome Powell on Friday.
Benchmark 10-year notes gained 14/32 in price on Monday to yield 2.824 percent, the lowest since July 6 and down from 2.873 percent on Friday. There was no major economic or other news driving market direction.
The yield curve between 2-year and 10-year notes flattened to 23 basis points, the flattest level since 2007.
Commodities Recap
Gold prices inched higher on Monday after touching a more than 1-1/2 year low last week as China's strengthening currency made the metal cheaper for buyers in the world's biggest gold consumer.
Spot gold gained 0.3 percent at $1,188.10 an ounce by 1:35 p.m. EDT (1735 GMT), after Thursday's dip to $1,159.96, the lowest since January 2017.
U.S. gold futures for December delivery settled up $10.40, or 0.9 percent, at $1,194.60 per ounce.
Oil futures rose on Monday after weeks of declines, as investors grew more concerned about an expected fall in supply from Iran due to U.S. sanctions and worried less that a trade war between the United States and China would hurt economic growth.
Brent crude futures rose 38 cents to settle at $72.21 a barrel, a 0.5 percent gain.U.S. West Texas Intermediate (WTI) crude rose 52 cents, or 0.8 percent, to end at $66.43 a barrel.
