- EUR steady, plays in between 1.1165/1.1215 on the day. 1.1116 was Friday's base.
- Sterling recovers from 5 month 1.5136 low Friday, 1.5179/1.5241 range.
- DXY down to 96.084 from Friday's 96.700 peak.
- European shares dip as VW and Vodafone lose ground.
- DAX down 1.3% to 9535. 9338 August base, 9362 Sept thus far.
- Brent off 1.45%, Light crude off 1.3%, oversupply fears cited.
- ECB Lautenschlaeger- Too early to talk about broadening of QE.
- BOJ Kuroda- Won't hesitate to adjust policy if needed.
- BOJ Kuroda- Can't conclude yet there will be 2 quarter contraction.
- BOJ Kuroda- BoJ's price goal plays key part in Abe's GDP target.
- Swedish trade deficit 3.6bln SEK in August.
- Swedish August retail sales +1.0% vs an upward revised 6.1% previous.
- Catalan separatist parties win an absolute majority in Catalonia parliament.
- (0830 ET/1230 GMT) US August personal income, +0.4% m/m eyed; last +0.4%.
- (0830 ET/1230 GMT) US August personal consumption, +0.3% m/m eyed; last +0.3%.
- (0830 ET/1230 GMT) US August PCE price index; last +0.1% m/m, +0.3% y/y.
- (0830 ET/1230 GMT) US August core, +0.1% m/m eyed; last +0.1% m/m, +1.2% y/y.
- (1000ET/1400 GMT) US August pending home sales, +0.5% m/m eyed; last +0.5%.
- (1030 ET/1430 GMT) US September Dallas Fed manufacturing business index; last -15.8.
- (1300 ET/1700 GMT) US August Dallas Fed PCE index; last +1.3%.
Key Events Ahead
- (0830 ET/1230 GMT) NY Fed Dudley speech.
- (1330 ET/1730 GMT) Chicago Fed Evans speech at Marquette University.
- (1700 ET/2100 GMT) SF Fed Williams speech at UCLA.
FX Recap
USD: The dollar moved back towards a 5-week high against a basket of major currencies, as investors look for U.S. payrolls and Chinese data later in the week for confirmation of Fed's rate hike this year. The dollar index was 0.2 pct was up at 96.328, just shy of Friday's high of 96.70.
EURUSD: We have a data-empty EUR calendar to kick-off a fresh trading week ahead, with the BOE and the Fed officials speeches' expected to keep EUR, GBP traders busy. Moody's Investors Service confirmed Greece's sovereign bond rating at Caa3 (junk rating, two steps above default) over the weekend but upgraded the outlook to 'stable' from 'negative' after the September 20 general elections. Pair is supported below 1.1200 levels. It made intraday high at 1.1214 and low at 1.1164. Looking ahead, we have a data-filled New York session with the Fed's favourite inflation gauge, the core PCE price index on the cards. Also, pending home sales and personal spending data will be reported ahead of the US open. Markets are expecting an unchanged reading for the PCE index (0.1% previous). Besides, New York Fed President William Dudley is due to discuss interest-rate increases and inflation expectations in an interview conducted by WSJ's Jon Hilsenrath. Initial support is seen around at 1.1015 and resistance at 1.1560 levels. Option expiries are at 1.0985-1.1000 (2.5BLN), 1.1080 (600M), 1.1200 (1.2BLN), 1.1225-35 (600M), 1.1270 (441M).
USDJPY: The Japanese currency outpaced the US dollar on Monday, keeping the pair near daily lows. The US session, however, is expected to dictate the sentiment, with a number of Fed voting members scheduled to speak later in the day. Pair is supported just above 120.00 levels. Pair made intraday high at 120.59 and low at 120.00 levels. On the Japanese macro front, the Leading Economic Index came in a little higher in July compared to the prior month, but had a rather low impact on the yen. Looking ahead, market will focus on US macroeconomic data for the further movement. Initial resistance is seen at 123.20 and support is seen at 118.42 levels. Option expiries are at 120.00 (700M), 119.00 (1BLN).
GBPUSD: Sterling recovered from a 3-1/2-month low against the dollar and rose 0.4 pct against the euro, boosted by expectations that the BoE will follow the U.S. Fed in raising interest rates in coming months. It rose 0.3 pct at $1.5220 vs the dollar, having hit a low of $1.5136 on Friday Sterling managed to correct some of last week's significant losses, although the US session will dictate sentiment, with a number of Fed voting members scheduled to speak later in the day. BOE MPC Member Cunliffe is due to participate in a panel discussion about financial regulation at the Banque de France Conference, in Paris. While FOMC member Daniel Tarullo is also scheduled to speak at the same event. Monday's data highlight will come during the US session when the Bureau of Economic Analysis is due to release the Core PCE price index for August, which is expected to have grown 0.1% month-on-month. The PCE index is widely accepted as the Federal Reserve's (Fed) preferred inflation gauge. A higher-than-expected core PCE inflation reading would add to speculation that the Fed will lift-off in October. Fed New York President William Dudley is due to speak during the US session, which will shed more light on the Fed's monetary policy stance. Pair made intraday high at 1.5241 and low at 1.5178 levels. Initial support is seen at 1.5185 and resistance is seen around 1.5725 levels.
NZDUSD: The kiwi extended last week's strong finish and rose for the fourth session in a row on Monday, helped by comments from Reserve Bank of New Zealand (RBNZ) Governor Graeme Wheeler who said that New Zealand's economy has performed better than many advanced economies in recent years. The only economic indicator from New Zealand on Monday was the Westpac McDermott Miller Employment Confidence Index for the September quarter, which came in at 99.3, its lowest in three years, down from 102.8 in the June quarter. A figure above 100 signals confidence, while a reading below 100 indicates pessimism. The NZD/USD was seen 0.20% higher to $0.6389, some 150 pips above last week's lows below $0.6240 seen on Wednesday. It made intraday high at 0.6402 and low at 0.6356 levels. Market now awaits US macroeconomic data for the further direction. Initial support is seen at 0.6195 and resistance at 0.6511 levels.
AUDUSD: Pair was seen only marginally higher on Monday, with investors not willing to trade heavily before some crucial US macro releases. It was seen changing hands at $0.7030, 0.10% stronger on the day. It made intraday high at 0.7036 and low at 0.0.7003 levels. Traders are waiting for a set of US macro data from Wednesday onwards, including the ADP report, the manufacturing ISM and the non-farm payrolls report, along with the unemployment rate from the US. Further volatility will very likely come after these events. Initial support is seen at 0.6908 and resistance at 0.7245 levels.
Markets Recap
World stocks were trading cautiously at the start of the week which provides readings on the state of the U.S. jobs market, China's economy and Europe's efforts to kick-start inflation.
Europe's FTSEurofirst 300 was down 0.3 pct, Germany's DAX fell 0.6 pct, UK's FTSE slid 0.6 pct and, France's CAC40 inched 0.8 pct lower in early deals.
Tokyo's Nikkei closed down 1.32 pct at 17,645.11, Shanghai Composite Index ended up 0.3 pct at 3,100.76 points and China's CSI300 Index closed up 0.3 pct at 3,242.75 points.
Commodities Recap
Oil prices fell, paring some of last week's 2 pct rally, despite evidence of slowing U.S. production and a fourth weekly increase in U.S. investor holdings of crude futures. Brent crude futures dropped 45 cents at $48.15 a barrel at noon, while U.S. crude was 37 cents down at $45.33 a barrel.
Gold extended losses into a second session ahead of a key U.S. jobs report this week, pressured by worries of the Fed rising interest rates this year. Spot gold was down 0.3 pct to $1,142.40 an ounce in early trades.
Treasuries Recap
JGB prices finished the day lower, sending yields up 2.5bp to 3bp from last Friday in the 7-yr and longer zone. JGBs opened softer on weaker German Bunds and US TSY bonds last Friday, and then extended their earlier losses slowly.
U.K. Gilts started with 21 ticks higher than the settlement of 118.35 as core markets opened the week on a firmer footing heading into month end. Gilts are also drawing support from month end duration and the Asset Purchase Facility reinvestment which resumes today in the 3 to 7-year bucket.
The yield on Germany's 10-yr bund dropped 4 bps to 0.61 pct, Spanish 10-year bond yield fell 10 bps, or 0.1 pp, to 1.94 pct as at 11:38 London time.
New Zealand government bonds were mostly steady. Australian government bond futures were firmer, with the 3-year bond contract up 1 tick at 98.140. The 10-year contract also added 1 tick to 97.2850.
