29 July, 2016

Daily Observations:

The yen climbed with gold and government bonds and most Asian equities were in the red as investors adopted a cautious stance before the BOJ’s much-anticipated policy review. Crude oil prices continue to fall while palladium and platinum hit 2016 highs.

US:

  • The S&P 500 Index edged 0.2% higher to close within striking distance of an all-time high amid mixed responses from earnings. Ford Motor and Food Markets Inc. slid on poorer-than-expected results while Facebook, Alphabet and Amazon rallied.
  • Apple sold $7 billion in bonds in its third undertaking this year to finance share buybacks.
  • The US dollar extended its weakness into Asia trading hours this morning with the Bloomberg Spot Dollar Index sliding 0.4% to test previous day’s lows.
  • The default rate for leveraged loans in the energy sector could spike close to 18% if Templar Energy and Stallion Oilfield Services are unable to make interest payments on their debts, Fitch Ratings warned.

Europe:

  • German inflation in July rose by 0.3% month-on-month and 0.4% year-on-year, a touch stronger than the estimates of 0.2% and 0.3% respectively.
  • The European Banking Authority will announce the results of its stress tests tonight, which is expected to shed light on non-performing loans by Italian lenders.
  • The spread between 10-year yields between Italy and German bonds held at the biggest level in 2 years, highlighting concerns by investors over tonight’s results.

Japan:

  • The BOJ is expected to deliver stimulus sometime today, with more ETF purchases the top bet among analysts.
  • Core CPI last month fell 0.5% from a year earlier, more than the 0.4% drop expected. Headline CPI declined 0.4% year-on-year, matching expectations.
  • June’s jobless rate dropped to 3.1% from 3.2% in May. Retail trade slid 1.4% from a year earlier and rose 0.2% from the previous month, worse than the median estimates of -1.2% and 0.3% respectively.
  • Industrial production last month rose 1.9% month-on-month but fell 1.9% from a year earlier, estimates were a 0.5% rise and a 2.9% drop, respectively.

China:

  • Xinhua News reported that the China Banking Regulatory Commission is drafting rules in a bid to govern China’s market for wealth management products to prevent risks in the sector.

Australia:

  • 2Q PPI rose 0.1% quarter-on-quarter and 1.0% year-on-year; prior figures were -0.2% and 1.2% respectively.
  • 24 out of 25 economists surveyed by Bloomberg expect the RBA to cut rates to 1.5% from 1.75% when they meet next Tuesday.

Precious Metals:

  • Spot gold continues to hold steady around the $1,340/Oz handle, following its 1.5% jump the previous day.
  • Silver mirrored gold’s movements, and is holding above the $20/Oz level.
  • Platinum and palladium are both at 2016 highs, with the latter adding 11% in July and the former soaring 17%.

Oil:

  • WTI oil futures expiring in September closed lower for the sixth day as it ended 1.9% weaker at $41.14/bbl.
  • Oil is nearing a 20% drop from levels reached in early June, a move that would characterize a bear market.

 

USDSGD:

  • Spot 1.3514
  • USDSGD is holding steady at the 1.3500 handle, following yesterday’s 0.6% slide.
  • The previous day’s strong rejection of the 1.3600 handle could indicate more downside for the currency pair, with the 1.3400 support level a possible target over the short term.

 

AUDUSD:

  • Spot 0.7527
  • AUDUSD has been holding up well against the 0.7400 support handle, rebounding from it twice this month so far. The currency pair was slightly higher this morning by 0.1%, recovering well from last night’s declines.

 

USDCAD:

  • Spot 1.3146
  • USDCAD was 0.2% weaker at 1.3133 earlier today and looks set to decline for the third day in a row.
  • The Canadian dollar has been somewhat resilient as of late despite the continued weakening of crude oil prices.

 

USDCNH:

  • Spot 6.6607
  • The PBOC strengthened its reference rate for a fourth day, by 0.13% to 6.65911 versus the US dollar.
  • USDCNH slid 0.1% to 6.6567 as the currency pair looks set for its second weekly decline in a row.
  • The 6.6500 level should offer some short-term support.

 

GBPUSD:

  • Spot 1.3194
  • Sterling rose 0.5% against the greenback, back to the 1.3200 handle and paring some of last night’s declines.
  • A head-and-shoulders pattern is beginning to take shape; a strong close above 1.3500 signals a strong reversal and will be a sign most GBP bulls will be keeping a lookout for.
© Jachin Capital Pte Ltd

UEN: 201419754M

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