Market Roundup
• Japan plans $33 billion budget for Abe's spending programme, draft version shows.
• Mexican economy contracts by 0.2 pct Q/Q in second quarter.
• Mexico cuts growth outlook after Q2 contraction, no recession seen.
• Brazil 2017 inflation, growth expectations improve-central bank poll.
• China eyes broad business cost cuts to underpin growth.
• Canada June wholesale trade increases 0.7 pct on autos.
• Industry group warns currency rally to hurt Brazil car exports.
• Swedish central bank's Floden: technically can cut repo rate further but not clear how far can cut in meaningful way.
Looking Ahead - Economic Data (GMT)
• 2:00 Japan Nikkei Mfg PMI Flash Aug 49.3 -previous
Looking Ahead - Events, Other Releases (GMT)
• 04:00 Japan BOJ Gov Kuroda Speaks at BOJ's Fintech Conference
Currency Summaries
EUR/USD is likely to find support at 1.1264 levels and currently trading at 1.1322 levels. The pair has made session high at 1.1330 and hit lows at 1.1305 levels. Euro inched higher against the greenback on Monday as traders avoided making bets ahead of a speech from the Federal Reserve Chair on Friday, while comments from another top Fed official kept the greenback stable. Traders remained on the side lines as they awaited comments from Fed Chair Janet Yellen at the central bank's annual meeting in Jackson Hole, Wyoming, while comments from Fed Vice Chair Stanley Fischer on Sunday led some to believe that Yellen may also strike a more hawkish tone and signal a rate hike this year. The dollar index, which measures the greenback against a basket of six major currencies, was last up 0.14 percent at 94.644 after falling about 1.3 percent last week. The euro was last down 0.18 percent against the dollar at $1.1305.The euro hit a nearly eight-week high against the dollar on Aug. 18 of $1.1365, and the greenback hit an eight-week low against the Swiss franc of 0.9532 franc after what traders perceived as mixed signals regarding U.S. monetary policy.
GBP/USD is supported in the range of 1.3051 levels and currently trading at 1.3138 levels. It reached session high at 1.3145 and hit low at 1.3125 levels. Sterling initially declined against the dollar on Monday, but rebounded sharply as markets awaited more clarity from the Federal Reserve on when it might raise U.S. interest rates later this week. The political uncertainty surrounding Brexit has darkened Britain's economic, business and investment outlook, and the Bank of England's first interest rate cut in seven years and relaunch of its quantitative easing programme this month has only piled on more pain for sterling. The pound was boosted last week by inflation and retail sales numbers for July that beat forecasts, adding to signs there has been little immediate impact on consumers from the Brexit vote. Better-than-expected jobless claims data also lifted the currency. Sterling was half a percent up against dollar $1.3144 and up 0.6 percent against the euro at 86.10 pence.
USD/CAD is supported at 1.2900 levels and is trading at 1.2941 levels. It has made session high at 1.2961 and hit low at 1.2901 levels. Canadian dollar weakened to one-week low against its U.S. counterpart on Monday as oil fell offsetting stronger-than expected domestic data. Canadian wholesale trade rose in June for the third month in a row, lifted by higher sales of motor vehicles, data from Statistics Canada showed on Monday. The 0.7 percent increase in wholesale trade topped economists' expectations for a rise of 0.1 percent. May was also revised upward, to 1.9 percent. The U.S. dollar firmed against a basket of major currencies after an upbeat assessment of the U.S. economy's strength from Fed Vice Chairman Stanley Fischer on Sunday. Fischer's assessment was seen raising the prospect of Fed Chair Janet Yellen flagging up a rate rise at a meeting with the world's central bankers on Friday. Canadian dollar was trading at C$1.2920 to the greenback, weaker than Friday's official close of C$1.2858.
AUD/USD is supported around 0.7583 levels and currently trading at 0.7630 levels. It hit session high at 0.7644 and made session lows at 0.7618 levels. The Australian dollar gained against US dollar on Monday as investors avoided taking major positions as investor focus will shift to Federal Reserve Chair Janet Yellen's speech on Friday at the annual central bankers' meeting in Jackson Hole, Wyoming, to assess the odds of an interest rate hike in coming months. The Australian dollar inched to 1.2965, from $0.7619 on Monday. Chart support was found at $0.7550, a major retracement level of the July-August rally.
Investors were now awaiting comments by Fed Chair Janet Yellen later this week at the annual economic symposium in Jackson Hole, Wyoming. Markets are implying around a 50-50 chance of a Fed hike by the end of the year but are not fully priced for move until mid- 2017.The currency market has been recently buffeted by conflicting views on U.S. monetary policy.
Equities Recap
European stocks rose on Monday after falling the week before, as Swiss chemical company Syngenta gained after U.S. regulators cleared a takeover bid for the company by ChemChina.
UK's benchmark FTSE 100 closed down 0.9 percent, the pan-European FTSEurofirst 300 ended the day down by 0.15 percent, Germany's Dax ended down 0.6 percent, France’s CAC finished the day down by 0.3 percent.
U.S. stocks were little changed on Monday as a drop in oil prices that weighed on the energy sector was offset with a strong showing by biotech stocks.
Dow Jones closed down by 0.12 percent, S&P 500 ended down by 0.06 percent, Nasdaq finished the day up by 0.11 percent.
Treasuries Recap
U.S. Treasury prices gained on Monday ahead of a speech by Federal Reserve Chair Janet Yellen on Friday that will be scrutinized by investors for indications of when the U.S. central bank will next raise interest rates.
Benchmark 10-year notes gained 12/32 in price on Monday to yield 1.54 percent, down from 1.58 percent late on Friday.
Commodities Recap
Oil settled down more than 3 percent on Monday, retreating from last week's two-month highs, on worries about burgeoning Chinese fuel exports, more Iraqi and Nigerian crude shipments and a rising U.S. oil rig count.
Brent crude settled down $1.72, or 3.4 percent, at $49.16 a barrel. It hit a two-month high of $51.22 on Friday.
U.S. West Texas Intermediate (WTI) crude's front-month contract, September, closed down $1.47, or 3 percent, at $47.05 before expiring. It hit a six-week high of $48.75 on Friday.
WTI's more active second month position, October, closed down $1.70, or 3.6 percent, at $47.41 a barrel.
Gold prices slid on Monday and hit a two-week low as upbeat comments from Federal Reserve officials on the U.S. economy boosted expectations that the central bank could lift interest rates sooner rather than later.
Spot gold was down 0.2 percent at $1,338.01 per ounce by 2:38 p.m. ET (1838 GMT) after hitting a session low of $1331.35, its lowest since Aug. 9.
The most active U.S. gold futures for December delivery settled down $2.8, or 0.21 percent, at $1,343.4 per ounce.
