Daily Observations:

Asian stocks rallied for a fourth day earlier today and commodities advanced, led by gains in precious metals amid expectations that central banks in the world’s leading economies will add further monetary stimulus.


  • The S&P 500 rose 0.2% to cap a 4-day rally, recouping all but around 0.5% of its 2-day decline triggered by Brexit. The US markets will remain shut Monday for Independence Day.
  • ISM manufacturing for June came in at 53.2, beating median estimates of 51.3.


  • An election on Saturday left neither of the major parties with enough seats to form a government in each of their own right, casting the future of the nation’s leadership in doubt and raising the prospect that Prime Minister Turnbull will be forced to work with a handful of disparate independent lawmakers in order to stay in power.
  • The hung parliament is a threat to the country’s AAA rating. Voting resumes Tuesday and Turnbull said the result may be known by the end of the week.


  • Chancellor of the Exchequer George Osbourne has set a goal of lowering the corporate tax rate to 15%, from 20%, in an effort to keep businesses investing in the UK as it prepares for Brexit.


  • A Bloomberg survey has shown increased expectations of a China bank bailout within the next 2 years, with the majority predicting that it will exceed $500 billion in costs.
  • Non-performing loans for Chinese lenders jumped by more than 40% in the 12 months ended March to $210 billion.

Precious Metals:

  • Following Friday’s 7.5% surge, spot silver advanced another 7.0% this morning to $21.1377/Oz, its highest level in almost 2 years.
  • Gold added 1.2% to test its post-Brexit high of $1,358.54/Oz.
  • Global gold holdings have expanded by more than 500 metric tons since bottoming in January in a signal of investors’ rising concern about slowing growth, a Fed that’s probably on hold and heightened concerns on Brexit.



  • Spot 1.3441
  • The Singapore dollar extends its advance for a fifth day as near-record low Treasury yields continue to weigh on the US dollar.
  • Immediate near-term support comes in at 1.3313, the currency pair’s year-to-date low.
  • June PMI is expected to remain the same at 49.8 for a third consecutive month, according to a Bloomberg survey. Data is due for 9pm local time.



  • Spot 0.7496
  • The currency pair opened the week 0.7% lower due to Saturday’s election results, but has since recovered back to Friday’s closing levels.
  • The RBA is due to meet tomorrow and is expected to keep its cash target rate unchanged at a record low 1.75%.
  • With the nation’s government in limbo, AUDUSD will continue to bear more risk to the downside with the 200-day moving average of 0.7294 a decent support level.



  • Spot 1.2895
  • More sideways action is likely for USDCAD, with resistance coming in at 1.3188 and support at 1.2655.
  • The currency pair ended Friday 0.1% lower, capping 4 consecutive days of declines.



  • Spot 6.6762
  • Onshore yuan fell to 6.6639 earlier today, its lowest level since Dec 2010. Offshore yuan was little changed from Friday’s close as it continues to fluctuate between 6.6800 and 6.6700.
  • The PBOC strengthened its yuan fixing marginally by 0.04% to 6.6472.
  • Shorter-term resistance for USDCNH comes in at the 6.7000 handle, while on a broader basis, the Jan 2016 high of 6.7618 remains a key level.



  • Spot 1.3286
  • Bank of England Governor Mike Carney is set to make his third appearance in 12 days on Tuesday to address the threats facing the financial system.
  • He will outline the macro-prudential tools available to support the economy, boost business lending and encourage investment. It is speculated that he might also ease capital requirements for lenders.
  • Carney had signalled a willingness to cut interest rates last week.
  • GBPUSD fell 1.6% on Friday; its post-Brexit low of 1.3121 remains the near-term support.


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UEN: 201419754M

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