- The US dollar weakened slightly to close out the week Friday, but still registered its longest weekly winning streak in almost a year. The Dollar Index slipped 0.2% Friday after testing last month’s 94.145 resistance, but still ended the week 0.8% higher.
- The US dollar strengthened after September’s nonfarm payrolls report showed better-than-expected average hourly earnings, and despite the decline in the headline number (-33k vs est. +80k) which was due to disruptions from hurricanes Harvey and Irma. The dollar erased gains later in the session after a Russian lawmaker warned that North Korean officials were planning a new test of a missile capable of reaching the US’s West Coast.
- The DXY continues to remain in a structural downtrend in spite of its fourth weekly gain. The 10-week resistance of 94.285 remains a crucial level; a break above will indicate a possible reversal of the current downtrend channel, established since the start of the year. The next resistance target to the upside lies around 96.500. To the downside, the 50-day moving average lends support to the existing level of 92.886.
- The White House team leading the search for the next Fed Chair is working with a shortlist of five names for Fed Chair, according to a Bloomberg report. The five candidates are former Fed Governor Kevin Warsh, Standford University economist John Taylor, current Fed Governor Jerome Powell, National Economic Council Director Gary Cohn and the current Fed Chair Janet Yellen.
- 10yr Treasury yields Friday briefly breached the 2.40% mark, reaching its highest in almost 5 months. The probability of a rate hike by year-end rose to 78.5%, according to pricing data on Bloomberg, following better-than-expected growth in average hourly earnings reported in last Friday’s nonfarm report.
- The key resistance region around the 40% – 2.42% looks to cap future gains over the coming week. Having rising sharply by about 30 basis points over the past 4 weeks, some form of pullback or correction back to the 2.30% handle is expected.
- Gold touched its lowest level in almost 2 months Friday, before paring losses towards the close amid renewed concerns on the geopolitical front, although the precious metal couldn’t avoid a fourth weekly consecutive loss.
- Following a decline of 5.2% over the past 4 weeks, gold could find some support above $1,250/Oz over the coming week, and looks poised to consolidate above it before deciding upon its next direction.
- Continued sabre-rattling between the US and North Korea should continue to buoy the metal during the start of this week. However, with a third Fed rate-hike in December given a 79% probability, gains to the upside is likely to be capped at $1,300/Oz.
- Crude oil retreated back below the $50/bbl handle Friday, on speculation rising global output may offset supply cuts led by members of OPEC. While market rebalancing is progressing, producers may need to take further steps to sustain the recovery into 2018, OPEC Secretary-General Mohammad Barkindo said Sunday.
- After September’s 9.4% rally, the usual suspects re-emerged: Saudi Arabia and other OPEC members increased production, Libya restarted its biggest oil field and US output reached a two-year high.
- On Friday, when concern eased over the impact of Tropical Storm Nate on U.S. Gulf Coast production, WTI dropped below its 200-day moving average of $50.78/bbl, which should continue to act as a ceiling over the coming week. To the downside, the oil bulls could start buying in near the $48/bbl
Upcoming Key Events:
- Investors will keep a keen eye out for further developments in the White House’s search for the next generation of Federal Reserve leaders. There have been reports that the Trump administration is seeking contenders willing to roll back financial regulations, and also possessing ample experience in monetary policy and the consensus-building skills to run a large organization.
- The FOMC’s latest meeting minutes will also be due out later this week. The markets have already priced in an almost-80% chance of a rate hike, and the minutes are expected to confirm that view.
- On the economic front, headline inflation data in the US is expected to have accelerated in September, while industrial production is predicted to have quickened in the Eurozone and the UK.
- US earnings kick off this week with 11 companies listed on the S&P 500 slated to report results.
- Closer to home, Singapore’s economy is expected to have expanded 3.7% during the third quarter this year, improving from the previous quarter’s 2.9% growth. The Monetary Authority of Singapore is also expected to announce its policy decision this month, although most expect policy settings to remain unchanged.
Weekly Thematic News:
Singapore Real Estate:
En-bloc sales, or redevelopment deals in which a group of owners band together to sell apartment blocks at a hefty premium, are at a 10-year high, according to estimates by OCBC Investment Research. On the back of a spate of deals last week, en-bloc sales have totalled more than S$5 billion this year, its highest level since 2007.
As of Monday, the Smart Real Estate Singapore portfolio on iAdvisor is currently up 20.6% year-on-year, outperforming other REIT indices such as the SGX S-REIT 20 (+12.3%) and the FTSE Straits Times REIT (+12.7%).
According to a survey by AIG Inc., US residents are “polarized” on whether to embrace driverless cars. Out of the 1,000 people polled, 42% were generally OK with it, while 41% said they had reservation. 39% said they thought such vehicles would operate more safely than the average driver, while three-fourths of the surveyed said there’s a threat that hackers would take control of autonomous vehicles. Still, the majority said they don’t expect driverless cars will be on the road within the next two decades.
The Self-Driving Car US portfolio on iAdvisor has been one of the stellar performers over the past year, returning an impressive 39.2% from a year ago.