• US Dec Markit Comp Flash PMI 53.7 v 54.9 previous
• US Dec Markit Svcs PMI Flash 53.4 v 54.6 previous.
• Fed’s Yellen: US job market strongest in nearly a decade; signs wage growth picking up.
• Fed’s Survey of workers age 18-30 finds young workers more optimistic about job prospects.
• Russia says its ambassador to Turkey has died after being shot, market subdued.
• Deutsche Bank could settle US penalty this week (Wednesday); set to pay less than USD 14bn.
• Periphery leads EZ bond yields lower, Monte dei Paschi in focus, Govt ready to step in if MdP plan falls through.
• Govt wants Brexit deal for whole UK (including Scotland) – PM May’s spokesman.
• China set for slower growth, tighter policy in 2017 as gov’t targets asset bubbles, growth to slow to 6.5% in ‘17.
• China central adviser says monetary policy could be tightened in 2017 -paper
Looking Ahead – Economic Data (GMT)
• No Significant Data
Looking Ahead – Events, Other Releases (GMT)
• 23:50 JP Bank of Japan monetary policy meeting (to Dec. 20)
• 00:30 AU Reserve Bank of Australia to publish the minutes of its December policy meeting
EUR/USD is likely to find support at 1.0362 levels and currently trading at 1.0403 levels. The pair has made session high at 1.0450 and hit lows at 1.0394 levels. Euro declined against the dollar on Monday as after Federal Reserve Chair Janet Yellen sounded an optimistic tone about the U.S. labor market. Yellen did not mention monetary policy in her speech, which was solely focused on the world of work, but did note those graduating were entering the strongest jobs market in nearly a decade. The U.S. unemployment rate, at 4.6 percent, is at its lowest level since 2007 and policymakers felt the economy sufficiently robust last week to raise interest rates for only the second time in a decade. The Fed raised rates for the first time in a year last week and projected three more increases in 2017, up from the two projected in September. The dollar index, which measures the greenback’s value versus the euro, yen and four other currencies, was up 0.09 percent at 103.04.
GBP/USD is supported in the range of 1.2349 levels and currently trading at 1.2395 levels. It reached session high at 1.2427 and dropped to session low at 1.2354 levels. Britain’s pound recovered around half of its earlier losses against the dollar on Monday after Prime Minister Theresa May said the country could cover EU funding when it leaves the bloc. Sterling had earlier shed as much as 1 percent on uncertainty over how the country will help businesses manage its exit from the European Union and the rising risk of a second Scottish independence referendum. But it pared some of those losses after May told parliament that Britain will match funding from the EU if it represents good value for money, weeks after Brexit minister David Davis said the UK could contribute to the EU budget in return for access to the single market. Sterling was last trading down half a percent on the day at $1.2394, having fallen to as low as $1.2355 as May began speaking to parliament, while the greenback held close to its highest level in 14 years against a basket of currencies.
USD/CAD is supported at 1.3337 levels and is trading at 1.3408 levels. It has made session high at 1.3419 and lows at 1.3378 levels. The Canadian dollar declined against its U.S. counterpart on Monday as oil dipped and expectations for further U.S. Federal Reserve interest rate hikes kept the greenback close to its highest in 14 years. The loonie fell 1.2 percent last week after the Fed raised interest rates and signaled increases would follow at a faster pace next year. The price of oil, one of Canada’s major exports, edged down due to renewed gains for the U.S. dollar, but losses were tempered by delays in new Libyan oil exports and expectations of tighter supplies going into 2017. Bank of Canada Governor Stephen Poloz said rising global protectionism could drive up the cost of goods and cause job losses, but dismissed the conclusion that Canadian exports will suffer under a Trump administration. The Canadian dollar was last trading at C$1.3414 to the greenback, or 74.73 U.S. cents, weaker than Friday’s close of C$1.3344, or 74.94 U.S.
USD/JPY is supported around 116.29 levels and currently trading at 117.37 levels. It peaked to hit session high at 117.37 and made session lows at 116.52 levels. The U.S. dollar initially dipped against the yen on safe-haven bids after the Russian ambassador to Turkey was shot to death in the Turkish capital but recovered some ground after Federal Reserve Chair Janet Yellen said the U.S. labor market has improved to its strongest in nearly a decade, suggesting wage growth is picking up. The safe-haven Japanese yen added to gains after the report of the ambassador being shot, rising more than 1 percent against the dollar. However, it retraced much of those gains after Yellen’s remarks. Ankara, an off-duty police officer opened fire and killed Russia’s ambassador to Turkey at an art gallery in the Turkish capital Ankara. Russia and Turkey have been on opposing sides of the conflict in Syria, straining relations. The greenback has rallied since the U.S. election on Nov. 8, underpinned by expectations of tax cuts, federal spending on infrastructure and looser regulations from President-elect Donald Trump. The yen was up 1 percent against the dollar at 117.20 yen after hitting 118.66 yen on Dec. 15, which was its weakest since Feb. 2.
European shares retreated from 11-month highs on Monday with Italy’s Monte dei Paschi BMPS.MI leading banks lower on worries over a cash call, and Danone hit after the world’s biggest yoghurt maker warned about sales growth.
UK’s benchmark FTSE 100 closed flat, FTSEurofirst 300 ended the day down by 0.09 percent, Germany’s Dax ended up by 0.1 percent, France’s CAC finished the day down by 0.2 percent.
Wall Street extended a recent rally on Monday but finished the session short of earlier highs after several people were killed by a truck driven into a Christmas market in Germany.
Dow Jones closed up by 0.21 percent, S&P 500 ended up 0.20 percent, Nasdaq finished the day up by 0.36 percent.
U.S. Treasury prices rose on Monday as investors were seen covering short positions heading into year-end, but gave up some gains after Federal Reserve Chair Janet Yellen gave an upbeat view of the jobs market.
Benchmark 10-year notes were last up 12/32 in price to yield 2.55 percent, after falling as low as 2.53 percent on news of the shooting in Turkey. The yields are down from 2.60 percent late on Friday.
Gold prices edged higher on Monday as geopolitical tensions offset expectations of tighter U.S. monetary policy and a stronger U.S. dollar.
Spot gold was up 0.31 pct at $1,137.55 an ounce by 2:40 p.m. EST (1940 GMT), even as the dollar reversed earlier losses. It hit $1,122.35, its weakest since Feb. 2, on Thursday under pressure from a stronger dollar after hawkish rate forecasts from the Federal Reserve.
The most-active U.S. gold futures for February delivery settled up $5.3, or 0.47 percent, at $1,142.70 per ounce.
Oil prices were little changed on Monday in quiet pre-Christmas trade as the market waited to see whether U.S. production from shale fields would grow enough to offset planned output cuts by OPEC, Russia and other producers next year.
Brent futures for February delivery lost 29 cents or, 0.5 percent, to settle at $54.92 a barrel, while U.S. West Texas Intermediate crude for January rose 22 cents, or 0.4 percent, to settle at $52.12 per barrel on its second to last day as the front month.