19 September 2016 at 11:13 GMT
Not much to move world markets today as Friday's US CPI beat continues to be the main data point affecting prices. New rumours out of Opec, along with military activity in Libya, have led to an upwards recovery in crude oil while gold stabilises above support.
This week sees the US Federal Open Market Committee as well as the Bank of Japan metting as many investors seem to be coming to the consensus that the status quo of quantitative easing and low-to-negative rates are no longer having the desired effect.
Underneath today's calm seas, there may be hidden any number of strange currents that could be unleashed by one or both central bank outings.
- RU Unemployment Rate (5.3% estimated,5.3% prior, 1300 GMT)
- RU Retail Sales m/m, y/y (y/y minus 4.9% estimated, minus 5% prior)
A generally calm FX session with no key data expected during the day. USDindex is pulling slightly lower (minus 0.2%) after the Friday’s jump to above 96 on a strong CPI release.
EURUSD: the benchmark pair is traded near to flat at 1.1168, paring small losses against the dollar in the morning session, yet still below the key resistance level of the 200-day moving average seen at 1.1181. USDJPY: the yen may be called the main mover on the quiet FX market today ahead of the BoJ meeting on Wednesday, being generally bought throughout the market (0.3-0.4%) and trading below 50-day moving averages in EURJPY (113.76) and USDJPY (101.84), which continues the contracting triangle formation well seen on both weekly and daily charts. GBP: a break of 1.3000 in GBPUSD points to 1.2800, but the trading will likely be treacherous this week.
Commodity currencies: in CAD the upside break level could not be more clearly etched on the USDCAD chart as we have the 1.3250-plus level now coinciding with the 200-day moving average.
FX Options volatilities
Vols trading a bit lower across the board this morning.
Late Friday vols got paid up, with one-month GBPUSD atm plus one vol after a strong US CPI number and a decent move in spot.
Today, one-month GBPUSD has retraced down around 0.5 vol as spot managed to settle above 1.3000. Expect vols to get paid up rapidly again if we break 1.3000.
A quiet session in the fixed income space. Bunds pushed marginally lower on reports the European Central Bank is likely to hold rates till the end of the year.
European stocks were gaining ground Monday with the Dax rising 0.8% to 10,356 and the CAC 40 jumped 1.3% to 4,390. Oil and gas, utility, and basic materials shares were among the best-performing sectors, recovering from Friday’s selloff.
The recovery in equities was helped by crude futures rising more than 1% after Venezuelan President Nicolás Maduro said Sunday that oil producers inside and outside Opec were getting close to a deal to curb output. Earlier in the weekend, Opec secretary-general Mohammed Barkindo dampened hopes for an output freeze at the informal talks in Algeria next week.
Oil prices also rose on news that military conflicts in Libya had affected its oil exports.
Consequently, Italy’s Eni was 2.5% higher, Total gained 2.1% and BP plc picked up 2.2%. Eni was also among Goldman Sachs’s buy recommendations Monday among integrated oil companies.
Deutsche Bank was down 1.6%, adding to Friday’s 8.5% slide after the US Department of Justice asked Deutsche Bank to pay $14 billion to settle civil claims related to mortgage-backed securities. However, the sector overall was recovering from Friday’s selloff.
Glencore rose 3.5% as Credit Suisse raised its rating on the commodities miner and trader to outperform from neutral. It said rising coal prices should aid in the company’s deleveraging and free cash flow generation heading into 2017.
The replay of our Morning Call can be found here.
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Markets are flat calm today ahead of this week's landmark central bank meetings. Photo: iStock
— Edited by Michael McKenna