EU FX: Dollar seesaws on Turkey fears ahead of U.S.-China trade talks I CNBC

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The dollar reversed gains on Monday as concerns eased about possible contagion effects of Turkey's currency crisis, though growing optimism over upcoming U.S.-China trade talks provided a floor for the greenback.
The U.S. currency weakened modestly against the euro during the North American session as investors unwound risk-off trades made earlier in the day, which had boosted the dollar due to its appeal as a perceived safe-haven investment.
"In the European session, emerging market tension had the dollar bid, and since then we've had a positive open. ... It's a risk-on session, and the dollar has come off accordingly," said Greg Anderson, global head of Foreign Exchange strategy at BMO Capital Markets in New York.
Against the U.S. currency, the euro strengthened to $1.1458, half a basis point higher than its session trough.
Concerns that the currency crisis in Turkey could hurt euro zone banks and uncertainty about the Italian government's planned budget had weighed on the euro earlier in the morning, analysts said.
"The euro is starting to reflect greater short-term domestic political angst," ING strategist Viraj Patel said.
"Investors will be cautious over Turkey's medium-term economic plan, while the next month or so will also see a narrower focus on the risks around (the) Italian budget," he said.
The dollar also had gained early in the North American session ahead of trade talks between the United States and China, due this week, which investors hope will ease tensions between the world's two biggest economies.
"The market is giving the resumption of U.S.-China trade talks the benefit of the doubt that they could be a stepping stone to a meaningful breakthrough," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.
Dealers cited speculation that the talks could set the stage for a summit between U.S. President Donald Trump and Chinese President Xi Jinping in November.
The dollar index was down 0.16 percent at 95.95.
Traders are also preparing for the release of Federal Reserve policy meeting minutes on Wednesday and an annual Jackson Hole symposium for insights into the likely direction of U.S. monetary policy.
On Monday, the lira fell 1.5 percent, pushed lower after S&P Global and Moody's downgraded the country's sovereign credit rating further into junk territory.

Bonds & Fixed Income Security: Future China-US trade talks in focus I CNBC

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Alexandra Gibbs, Thomas Franck

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U.S. government debt yields fell to session lows on Monday after President Donald Trump scorned the Federal Reserve's decision to raise interest rates.
Trump told Reuters he was "not thrilled" with Fed Chair Jerome Powell for the bumps to the federal funds rate, saying that "I should be given some help by the Fed." He said he would criticize the Fed if it continues to the elevate the cost of borrowing.
The central bank's latest meeting minutes are scheduled for release Wednesday while Powell is set to speak Friday. Fed officials are expected to hold high-level discussions about policy and the economy while in Wyoming, with some market watchers hypothesizing that the central bank could debate changing its policy on its balance sheet.
The yield on the benchmark 10-year Treasury note fell 5 basis points to 2.819 percent at 4:28 p.m. ET, while the yield on the 30-year Treasury bond also lost 5 basis points to hover at 2.984 percent. Bond yields move inversely to prices.

"We've heard from presidents in the past say they want more accommodation but to comment on the next policy from the Fed is unusual," said Lindsey Piegza, chief economist at Stifel Nicolaus. "These are very specific comments that are intended to be left to policy experts ... These types of comments could be perceived to threaten the autonomy of the Federal Reserve."
It is uncommon for presidents to explicitly criticize Fed chairmen, who are supposed to be independent. But Trump has already done so in an interview on CNBC earlier this summer.
"I think what we're seeing here is a president who is accustomed to talking about a whole wide range of issues, whatever happens to be front and center, whatever happens to be at the front of his mind," added Nathan Sheets, chief economist at PGIM Fixed Income.
A strong job market and healthy economic growth have kept the Fed on its course for continued rate hikes in 2018. Central bankers have been increasing rates off historic lows a decade after it flushed the financial system with money to help it recover from the financial crisis. The Fed has long-telegraphed its intention to raise rates back to a neutral level.
The Federal Open Market Committee has voted to raise rates five times since Trump's inauguration and is expected to hike them twice more through December 2018.
"For the Fed, they're at a place where the labor market is well stronger than neutral and the interest rate is still well below neutral," he added. "The Fed needs — by any theory of central banking — to move the rate back to neutral. There are many more risks if they fail to do that."
With little major economic data due out Monday, investors in the bond market will be turning their attention to the political space.
On Thursday, White House economic advisor Larry Kudlow confirmed to CNBC earlier reports that China and the U.S. would hold a fresh round of trade discussions later this month.
A day later, markets ticked higher following news reported by The Wall Street Journal that a nine-member delegation from Beijing would hold meetings with officials from the States later this week. The report added that this could lead to a potential meeting between the presidents of the two countries in November. While the latest news has buoyed markets, investors remain cautious.

The U.S. Treasury is set to auction $51 billion in 13-week bills and $45 billion in 26-week bills. The size of a four-week bill, due to be auctioned Tuesday, will also be announced.

Gold Price at Close Report: Gold climbs higher as trade talks lift China's yuan I CNBC

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Gold prices inched higher on Monday after touching a more than 1-1/2 year low last week as China's strengthening currency made the metal cheaper for buyers in the world's biggest gold consumer.
Gold has tumbled 13 percent from an April high as the dollar appreciated against the yuan and other currencies, raising the cost of dollar-priced bullion outside the United States.
That pressure eased after news of U.S.-China trade talks planned for this week helped lift the yuan, said Saxo Bank analyst Ole Hansen.
Spot gold gained 0.5 percent at $1,190.43 an ounce, after Thursday's dip to $1,159.96, the lowest since January 2017.
U.S. gold futures for December delivery settled up $10.40, or 0.9 percent, at $1,194.60 per ounce.
"Value-buying in this oversold territory is highly likely to underpin gold prices," Religare Securities analyst Sugandha Sachdeva said. Lower prices are sparking a revival in demand for physical gold in Asia.
Lower prices have also sparked an increase in gold options trading from bargain-hunters who are pushing bullion prices higher, said ThinkMarkets.com analyst Naeem Aslam. Should China's yuan continue to strengthen, gold would become cheaper for Chinese investors.
However, "the price really needs to break above the $1,200 mark in order for us to have any kind of confidence that the bulls are back in power. Otherwise it would be very much like a bull trap," Aslam said.
Downward pressure from speculators remains strong. Bets on lower prices by hedge funds and money managers on the Comex exchange continue to build and outweigh bets on higher prices by 77,273 lots, the largest quantity ever recorded.
Technical and momentum indicators suggest gold will fall toward support at its January 2017 low of $1,146.20, said analysts at ScotiaMocatta. Fibonacci resistance was at $1,185.30, they said.
Investors are anticipating a Friday speech by U.S. Federal Reserve Chairman Jerome Powell at an economic symposium in Jackson Hole, Wyoming, where he might give clues about the pace of U.S. interest rate rises, analysts said.
Rising interest rates make gold, which pays no interest and costs to store and insure, less attractive.

Wall Street at Close Report: Stocks rise, lifting the S&P 500 to less than 1% from record I CNBC

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Fred Imbert, Alexandra Gibbs

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Stocks neared a new record as investors renewed their bets that trade wars and other geopolitical worries wouldn't derail this bull market, which is set to become the longest rally ever this week.
Dealmaking activity and falling rates also helped lift market benchmarks on Monday. Netflix shares led the market's gains.
The S&P 500 advanced 0.2 percent to 2,857.05 and is now just under 0.6 percent from its record reached in January. The Dow Jones Industrial Average climbed 89.37 points to close at 25,758.69 with Nike outperforming. Nike shares rose 3.1 percent after Piper Jaffray upgraded the athletic apparel maker to overweight from neutral and raised their price target to $93 a share from $72. The stock traded around $82 per share.
The Nasdaq Composite gained just under 0.1 percent to close at 7,821.01 as a 3.5 percent rise in Netflix offset a decline in Facebook. Netflix shares rose after the company confirmed it was testing ads on its platform.
The bull market turns 3,453 days old this Wednesday. Barring a 20 percent decline between now and then, it would mark the longest bull market in history, according to S&P.
Since the current bull market started on March 9, 2009, the S&P 500 has surged more than 300 percent.
"The length of this bull market is unprecedented but so was the decline we saw," said Shannon Saccocia, CIO at Boston Private. "The depths of the decline were really unprecedented; that's really an outlier." The current bull market started after the financial crisis.

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Treasury yields slipped on Monday, with the 10-year yield trading at 2.825 percent. President Trump reportedly knocked Federal Reserve Chairman Jerome Powell again for raising rates.
PepsiCo agreed to buy SodaStream for $3.2 billion, or $144 per share. The agreed price per share represents a 10.9 percent premium from SodaStream's closing price of $129.85 on Friday. The deal is expected to close by January. SodaStream shares rose about 9.4 percent.
Meanwhile, Tyson Foods confirmed it was buying Keystone Foods, a chicken-processing company, for $2.16 billion in cash.
"M&A is always a positive for the market. It shows corporations are not worried about the economy faltering," said Peter Cardillo, chief market economist at Spartan Capital Securities.
Equities closed a volatile week on Friday on a high note. The Dow rose more than 100 points while the S&P 500 and Nasdaq also logged in some gains. Stocks got a boost after a report said President Donald Trump and Chinese leader Xi Jinping hope to discuss U.S.-China trade in November.
"Perhaps it's time to stop using the adjective 'escalating' to describe the trade war," said Ed Yardeni, president and chief investment strategist at Yardeni Research. "What if this all leads to less protectionism once the fog of war clears? This possibility sure helps explain why the US stock market has performed so well so far this year."
Facebook's stock slipped 0.8 percent after Reuters reported the U.S. government is trying to force the company to break its encryption on the Messages app.

Oil Price at Close Report: Brent oil stabilizes near $72 as trade war concerns ease I CNBC

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Oil futures rose on Monday after weeks of declines, supported by easing concerns over a potential trade war between the United States and China, as well as an expected fall in supply from Iran due to U.S. sanctions.
U.S. West Texas Intermediate (WTI) crude futures for September delivery ended Monday's session 52 cents higher at $66.43 per barrel. That contract expires on Tuesday. The October WTI contract was trading up 32 cents at $65.53 at 2:15 p.m. ET.
Brent crude futures, a benchmark for international oil prices, were up 57 cents, or nearly 1 percent, at $72.40 per barrel.
Last week, Brent declined for a third consecutive week, while WTI fell for a seventh week due to concerns about a slowdown in economic growth because of U.S.-Chinese trade tensions and weakness in many emerging economies.
However, China and the United States will hold trade talks this month, the two governments said last week, in an effort to resolve an escalating tariff war that threatens to engulf all trade between the world's two largest economies.

Still, White House economic adviser Larry Kudlow said Beijing should not underestimate President Donald Trump's resolve in what Kudlow called a "battle to eliminate tariffs and non-tariff barriers and quotas, to stop the theft of intellectual property and to stop the forced transfer of technology."
"Part of the weakness we've seen in crude oil has largely been due to trade as people are concerned that increasing tariffs and tensions on trade are going to increase the level of uncertainty and potentially reduce global GDP demand," said Brian Kessens, portfolio manager and managing director at Tortoise.
"Anything that reduces those tensions, you can see oil generally move back the other way."
Traders said U.S. sanctions against Iran were also supporting prices. The U.S. government has introduced financial sanctions against Iran which, from November, will also target the petroleum sector of OPEC's third largest producer.
On Monday, Iran asked the European Union to speed up efforts to save a 2015 nuclear deal between Tehran and major powers, which Trump abandoned in May. Most EU companies have pulled out of Iran for fear of U.S. sanctions and Tehran said France's Total had officially exited Iran's South Pars gas project.
"We continue to believe that despite all of the political goodwill that may exist in Europe, there is no practical way that many of the sizeable European buyers of Iranian crude can be protected from U.S. sanctions," JBC Energy said in a note.

However, China signaled it wanted to continue buying large volumes of Iranian oil despite U.S. pressure and was now switching to Iranian tankers to skirt U.S. sanctions on ship insurers.
A strong U.S. dollar and currency weakness in oil-consuming nations like Turkey and India is continuing to impact the crude market.
"The dollar strength is really becoming a problem for a lot of the countries that are struggling," said John Kilduff, founding partner at energy hedge fund Again Capital. "They're having to pay for this oil in dollars, and their currencies are getting pounded, so there's real concern about the demand story now."
In the United States, energy companies last week kept the oil rig count unchanged at 869, according to the Baker Hughes energy services firm.
"The recent softening in benchmark prices should temper the pace of growth in U.S. exploration and production activity, and lead to slower overall output growth," Bell said.
— CNBC's Tom DiChristopher contributed to this report.

David W. Wilcox, director of the Division of Research and Statistics, to retire at year end I The Fed I Press Release

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David W. Wilcox, director of the Division of Research and Statistics, will retire at the end of this year after 30 years of service with the Federal Reserve Board, including seven years as the director of the division.
In addition to overseeing the 350 employees of the Division, Wilcox has been responsible for briefing the Federal Open Market Committee on the outlook for the U.S. economy. The Board's Division of Research and Statistics engages in economic analysis, forecasting, and research related to the domestic economy and financial markets. The Division also conducts several major programs in economic measurement, and provides research and analysis supporting the Federal Reserve's financial stability responsibilities and supervisory and regulatory activities.
"David's depth of expertise and wise counsel have helped guide the Federal Reserve through a time of unprecedented challenges," said Federal Reserve Board Chairman Jerome H. Powell. "We will miss his prowess as an economist, his leadership in promoting diversity and inclusion in the field of economics, as well as his incomparable wit and good humor."
During his tenure as director, Wilcox has devoted particular energy to improving diversity and inclusion, both within the economics divisions at the Board and in the economics profession more generally. He has also focused on improving the ability of the Board's staff to track the current position of the U.S. economy, including through the development of innovative new indicators. Wilcox has served on the Board of Advisors of the Federal Reserve Bank of Minneapolis's Opportunity and Inclusive Growth Institute since its inception in early 2017.
Wilcox has served as director under three Chairs of the Federal Reserve: Ben Bernanke, Janet Yellen, and Jerome Powell. A search for his successor will begin later this year.
Before being named Division director in July 2011, Wilcox served on the Board staff from 1986 to 1997 in a variety of assignments spanning economic forecasting, economic measurement, monetary policy formulation, and other topics.
During 1994 and 1995, he was detailed to serve on the staff of the President's Council of Economic Advisers. In 1997, he resigned from the Board staff to serve as assistant secretary for economic policy at the Treasury Department. Wilcox returned to the Board staff in 2001 as deputy director of the Division of Research and Statistics. He has published numerous papers and articles in the areas of monetary policy, fiscal policy, household spending and saving behavior, economic forecasting at the Federal Reserve, economic measurement, and defined-benefit pension plans.
Wilcox received his B.A. in mathematics at Williams College in 1980 and his Ph.D. in economics from the Massachusetts Institute of Technology in 1987.
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