- EUR/USD claws back 1.1056 from 1.0989 but off highs into NY.
- USD/JPY down from 121.60 to 120.77 then back to 121.15.
- DXY off Friday's 97.201 peak but losses limited.
- Poland currency falls vs euro after election news but relatively steady.
- Germany October IFO Business climate 108.2 vs previous 108.5. 107.8 expected.
- Germany October IFO Current conditions 112.6 vs previous 114.0. 113.5 expected.
- Germany October IFO Expectations 103.8 vs previous 103.3. 102.4 expected.
- UK September BBA mortgage approvals bln vs 46.743bln previous.
- Switzerland domestic sight deposits weekly Oct 23 401.209bln vs previous 399.077 bln.
- SSEC closes up 0.5% at 3,429.58pts.
- European shares fall at open as rate-cut effects fade.
- FTSEurofirst 300 down 0.1 pct, DAX flat, FTSE100 down 0.2%.
- IMF set for green light on China's Yuan joining currency basket.
- BOJ Hamada - No need for BoJ to ease as US rate expectations keep yen weak.
- BOJ Hamada - BoJ can wait for more easing as job market tight.
- SNB Zurbruegg - Negative rates will stay as long as needed.
- Central banks in focus; Fed, BOJ, RBNZ make rate decisions this week.
- (0830 ET/1230 GMT) Turkey capacity utilisation and manufacturing confidence data.
- (1000 ET/1400 GMT) US September new home sales, 550k AR, -0.4% m/m eyed; last 550k, +5.7%.
- (1000 ET/1400 GMT) Mexico economic activity.
- (1030 ET/1430 GMT) US Oct Dallas Fed manufacturing business index; last -9.5.
- (1500 ET/1900 GMT) Argentina monthly economic activity index.
Key Events Ahead
- (1145 ET/1545 GMT) Fed Trade operation 30-year Fannie Mae / Freddie Mac (max $1.625 bn).
FX Recap
USD: The dollar slipped 0.3 percent from a 2-1/2-month high to 96.762 versus a basket of major currencies on Monday, although an increase in risk appetite in the wake of a new round of monetary easing from PBoC limited the greenback's losses.
EUR/USD: The Euro continued higher after the German IFO business survey for October came in slightly better than the preceding month, beating the forecast. Expectations came in at 103.8 vs. 102.4 expected, Current Assessment at 112.6 vs. 113.5 expected and Business Climate at 108.2 vs. 107.8 expected. The demand for EUR remains subdued in spite of today's recovery, as market participants continue to factor in the likeliness of further ECB easing (to be most likely announced in December) and the possibility of a hawkish message by the FOMC at its meeting on Wednesday. It made intraday high at 1.1039 and low at 1.0996 levels. Initial support is seen around at 1.0972 and resistance at 1.1560 levels. Option expiries are at 1.0930 (338M), 1.1000 (1.1BLN), 1.1050-60 (427M).
USD/JPY: The US dollar weakened on Monday as USD bulls corrected last week's rally, with the pair easing around the ¥121 handle. The US dollar was a clear winner in the previous days, as it managed to breach the ¥121 mark amid somewhat positive US data and risk-on trading, induced by soaring stocks. The Fed's meeting will be followed by the Bank of Japan, which is not expected to increase its QQE program, although some speculations have been mounting that the BoJ will adjust the pace of bond buying until the end of 2015 to combat deflation and worsening economic conditions. Pair made intraday high at 121.49 and low at 120.78 levels. Initial resistance is seen at 123.20 and support is seen at 118.42 levels. Option expiries are at 120.00 (1.2BLN), 120.50 (372M), 121.50 (320M).
GBP/USD: Pair was seen 0.25% stronger on Monday, trading around $1.5345 during the London session as volatility was calm. In the data space, UK's Mortgage Approvals by BBA have come in on the softer side at 44.489K during September. An increase in the Bank of England's base interest rate is still a decision to be taken, given the current headwinds flowing against the UK economy, bank Governor Mark Carney said on Sunday. Pair made intraday high at 1.5349 and low at 1.5304 levels. Initial support is seen at 1.5107 and resistance is seen around 1.5725 levels.
NZD/USD: NZ are out on Labour Day and focus remains with the commodities and US data that comes later in the week, while the RBNZ will have the final say as to the direction of the bird. The RBNZ is not likely to act, according to the general market consensus, but there is the possibility of a rate cut with lower q/q inflation and based upon the recent statement from Wheeler when he said, "Some further easing in the OCR seems likely, but this will continue to depend on the emerging flow of economic data." Pair made intraday high at 0.6792 and low at 0.6737 levels. Initial support is seen at 0.6235 and resistance at 0.6896 levels. Option expiry is at 0.6530 (918M).
AUD/USD: Asian and antipodean currencies rallied strongly on the back of the People's Bank of China's (PBoC) announcement last week that it had cut interest rates again and lowered the reserve requirement ratio in an effort to boost the ailing economy. Focus remains on China as it's Fifth Plenum begins today and the key elements of China's 13th Five Year Plan are expected to be fleshed out over the four-day meeting. Pair made intraday high at 0.7266 levels and low around 0.7207 levels. Initial support is seen at 0.6908 and resistance at 0.7438 levels. Option expiry is at 0.7275-80 (491M).
Equities Recap
European shares dropped in early trading on Monday as euphoria about the prospect of further ECB policy easing faded, with investors warning against over-confidence ahead of another week of interest rate decisions.
The pan-European FTSEurofirst 300 index was down 0.3 pct, Germany's DAX was flat, France's CAC slipped 0.3 pct and UK's FTSE edged down 0.1 pct in early trades.
Tokyo's Nikkei average ended up 0.65 pct at 18,947.12, while MSCI's index of Asia-Pacific shares outside Japan edged up 0.1 pct, China's CSI300 index closed up 0.5 pct at 3,589.26 points, HK's Hang Seng Index fell down 0.2 pct at 23,116.25 points and Shanghai Composite Index went up 0.5 pct at 3,429.58 points.
Commodities Recap
Oil rose higher on Monday as investors prepared for a week of important economic indicators, but prices remained range-bound on indications that the world's stored oil was nearing capacity, stoking a persistent supply glut. Brent, the international benchmark, went up 25 cents at $48.24 a barrel, 11 pct below this month's high. U.S. crude futures traded up 24 cents at $44.84 a barrel.
Gold steadied after a three-day losing streak on Monday, but was hovering close to its lowest in nearly two weeks, hurt by a strong dollar and fears Fed's interest rates hike this year. Spot gold was little changed at $1,165.16 an ounce.
Treasuries Recap
10- year U.S. Treasury yeilds stood at 2.076 pct vs U.S. close of 2.083 pct on Friday.
Italian and Spanish bond yields were nearly at their lowest levels in half a year on expectations additional ECB stimulus will lift lower-rated euro zone bonds. German Bund yields hovered just above 0.50 pct, bund futures opened 2 ticks lower at 157.44.
JGBs opened softer on weaker German Bunds and US TSY last Friday, and then moved in a very narrow range. JGB prices closed the day slightly lower in very quiet trading. Yields on the current 10-yr, 20-yr, and 30-yr JGBs were hovering at 0.30%, 1.055%, and 1.33%, respectively, for the last several sessions, ahead of the Oct 27-28 FOMC meeting and Friday's 1-day BoJ policy board meeting.
UK government bond yields rose to their highest level in just over a month on Monday after the release of lending data from the British Bankers' Association which showed solid lending, though less than in recent months. 10-year gilt yields climbed as high as 1.879 pct, up 2 bps on the day and a level last seen on Sept. 22, while December gilt futures extended losses by almost 10 ticks.
Australian government bond futures slipped, 3-year bond contract dropped 4 ticks at 98.170. The 10-year contract slid 6.5 ticks to 97.2950, while the 20-year contract off 4.5 ticks to 96.7750. Trading in NZ bonds was thinned due to a holiday in New Zealand.
