Market Roundup
• End of era beckons as Merkel says will not stand again as chancellor.
• UK austerity ending, as long as Brexit deal gets done – Hammond.
• US Sep Consumption, Adjusted m/m , 0.4%, 0.4% forecast, 0.3% previous, 0.5% revised.
• US Sep Personal Income m/m, 0.2%, 0.3% forecast, 0.3% previous, 0.4% revised.
• US Sep Core PCE Price Index m/m, 0.2%, 0.1% forecast, 0.0% previous.
• US Sep Core PCE Price Index y/y, 2.0%, 2.0% forecast, 2.0% previous.
• Atlanta Fed sees U.S. growth at 2.6 pct in Q4.
• Brazil's Bolsonaro will not set FX target, chief of staff says.
• U.S. urges EU to stop WTO steel spat, hopes for deal with Canada, Mexico.
• Italy eyes ways to reduce deficit in 2019 budget - govt source.
• Mexico's peso falls to 4-month low after vote to cancel new airport.
• Sri Lankan rupee hits record low amid political crisis; stocks at 6-week high.
Looking Ahead - Economic Data (GMT)
• 29 Oct 23:30 Japan Sep Jobs/Applicants Ratio, 1.63 forecast, 1.63 previous
• 29 Oct 23:30 Japan Sep Unemployment Rate, 2.4% forecast, 2.4% previous
• 30 Oct 00:30 Australia Sep Building Approvals, 3.0% forecast, -9.4% previous
• 30 Oct 00:30 Australia Sep Private House Approvals, -1.9% previous
Looking Ahead - Events, Other Releases (GMT)
• NA Bank of Japan holds Monetary Policy Meeting (to Oct. 31) in Tokyo
• 08:15 Norway Central Bank's Jon Nicolaisen speaks at a conference hosted by Finance Norway and Eiendom Norge in Oslo
• 13:30 ECB's Peter Praet chairs the panel "Monetary Policy: bridging science and practice" in Frankfurt"
• 19:30 Bank of Canada's Stephen Poloz and Carolyn Wilkins appear for the House of Commons Standing Committee on Finance in Ottawa
Currency Summaries
EUR/USD is likely to find support at 1.1335 levels and currently trading at 1.1388 levels. The pair has made session high at 1.1399 and hit lows at 1.1366 levels. The euro dipped against the U.S. dollar on Monday as single currency came under selling pressure on news of German Chancellor Merkel won't run for party leadership. The euro fell 0.4 percent to hit a day's low of $1.136 after senior party sources made the announcement, effectively clearing the way for her Christian Democrats party to groom her successor.Merkel said she would not seek re-election as party chairwoman, ending a 13-year era in which she has dominated European politics. Merkel has loomed large on the European stage since 2005, helping guide the EU through the euro zone crisis and opening Germany's doors to migrants fleeing war in the Middle East in 2015 a move that still divides the bloc and Germany. The euro was 0.14 percent lower against the greenback. The dollar index, which measures the greenback against a basket of six major currencies, was up 0.24 percent at 96.594, just shy of the 10-week high hit on Friday.
GBP/USD is supported in the range of 1.2774 levels and currently trading at 1.2802 levels. It reached session high at 1.2826 and dropped to session low at 1.2788 levels. The British pound declined against the greenback on Monday as Britain's finance minister Philip Hammond laid out the prospect of an end to austerity so long as Britain agrees a Brexit deal with the European Union. Hammond’s annual budget, with many of the announcements contingent on Britain avoiding a disorderly departure from the EU in March, was largely a non-event for a currency more concerned with the Brexit negotiations. The British currency fell to as low as $1.2791 , down 0.2 percent on the day as Hammond spoke to lawmakers, after earlier trading mostly above $1.28.That left the currency close to two-month lows of $1.2777 reached last week. After a decade of cuts to public services, Hammond offered a glimpse of higher spending. But he made clear that more spending will hinge on London getting a Brexit agreement with Brussels, putting pressure on rebels in the ruling Conservative Party to back Prime Minister Theresa May.
USD/CAD is supported at 1.3066 levels and is trading at 1.3147 levels. It has made session high at 1.3142 and lows at 1.13078 levels. The Canadian dollar weakened against its U.S. counterpart on Monday, as the price of oil, one of Canada's major exports, slumped ,while greenback rose. U.S. crude fell 1.41 percent to $66.64 per barrel and Brent was last at $76.78, down 1.08 percent on the day. The U.S. dollar climbed against a basket of currencies after a report that German Chancellor Angela Merkel will not seek re-election as party chairwoman weighed on the euro. The Canadian dollar was trading 0.2 percent lower at 1.3141 to the greenback. The currency, which on Friday hit a six-week low intraday at 1.3160, traded in a range of 1.3078 to 1.3118.The loonie dipped 0.1 percent last week even as the Bank of Canada raised interest rates for the fifth time since July 2017 and said it might speed up the pace of future hikes given that the economy was running at almost full capacity and did not need any stimulus.
AUD/USD is supported around 0.7955 levels and currently trading at 0.8035 levels. It hit session high at 0.8037 and made session lows at 0.7984 levels. The Australian dollar eased against greenback on Monday as weaker-than-expected Chinese economic data weighed on Australian dollar. Profit growth at China's industrial firms slowed for the fifth consecutive month in September as sales of raw materials and manufactured goods further ebbed, pointing to cooling domestic demand in the world's second-biggest economy. The slowdown was in line with data last week that showed September's factory output grew at the weakest pace since February 2016.Slowing corporate profits will put pressure on jobs, ultimately tapping the brakes on household consumption and hurting China's overall growth. Industrial profits rose 4.1 percent in September from a year earlier to 545.5 billion yuan ($78.57 billion), the National Statistics Bureau (NBS) said on Saturday. The Australian dollar, which is often traded as a liquid proxy for the yuan, slipped 0.1 percent to $0.7086, not far from Friday's trough of $0.7018 which was the lowest since early 2016. In addition, worries about the Sino-U.S. trade war also weighed on Australian dollar.
Equities Recap
A rally in auto and banking stocks helped European shares rise on Monday in a rebound from a sell-off which had depressed them to a level not seen since December 2016.
UK's benchmark FTSE 100 closed up by 1.37 percent, the pan-European FTSEurofirst 300 ended the day up by 0.88 percent, Germany's Dax ended up by 1.29 percent, France’s CAC finished the day up by 0.50 percent.
U.S. stocks fell on Monday in a volatile session, with the S&P 500 ending just shy of confirming its second correction of 2018, hurt by fresh worries of an escalation of U.S.-China trade tensions and a sharp drop in big tech and internet names.
Dow Jones closed down by 0.99 percent, S&P 500 ended down by 0.62 percent, Nasdaq finished the day down by 1.58 percent.
Treasuries Recap
Yields on U.S. Treasury bonds fell modestly on Monday afternoon after stocks took a nosedive on a report that President Donald Trump was preparing more tariffs on imports from China.
The 10-year note yield fell modestly on the news, last at 3.083 percent, up less than half a basis point from the open. The 30-year bond yield made similar moves, slightly up for the day at 3.324 percent. The short end of the curve had turned negative for the day, with the two-year note at 2.814 percent, down less than half a basis point from the open.
Commodities Recap
Gold eased on Monday, sliding off a more than three-month peak in the previous session, pressured by a strong dollar and as investors returned to riskier assets following a recent sell-off in global stocks.
Spot gold was down 0.6 percent at $1,225.71 per ounce at 13:34 a.m. ET (1734 GMT). U.S. gold futures settled down $8.20, or 0.7 percent, at 1,227.60.
Oil prices edged lower on Monday, with futures on track for the worst monthly performance since mid-2016, after Russia signaled that output will remain high and as concern over the global economy fueled worries about demand for crude.
Brent crude futures fell 28 cents to settle at $77.34 a barrel. U.S. West Texas Intermediate (WTI) crude futures fell 55 cents to settle at $67.04 a barrel.
