Spot values at a glance:
Asian stocks were mixed, while Treasury bond yields dropped to the lowest level this year in reaction to US President Trump’s comments regarding the dollar’s strength. The Japanese yen and gold extended gains. Chinese and Hong Kong equities gained after China’s exports jumped the most in 2 years as global demand held up.
- In an interview with the Wall Street Journal, President Donald Trump said he is still undecided on re-nominating Federal Reserve Chair Janet Yellen, adding that he “likes” and “respects” her.
- Trump also added he won’t brand China a currency manipulator, retreating from a core campaign promise, and argued that the dollar “is getting too strong”, which is hampering the ability of American firms to compete.
- Trump’s comments resulted in slumps in US 10yr bond yields and the US dollar. The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, retreated 0.5% in New York and a further 0.3% earlier today, breaching below its 200-day moving average for the second time in 2 weeks.
- US Treasuries rallied after Trump commented that he likes the Fed’s low-interest rate policy; the benchmark 10yr Treasury yield sank 6bps to 2.24% overnight, and an extended 2bps to 2.22% in Asia earlier today – the lowest since 17 Nov. last year.
- US equities retreated for a second straight day, with the S&P 500 Index falling 0.4%; industrials and materials stocks led losers.
- US Secretary of State Rex Tillerson and Russian Foreign Minister Sergei Lavrov vented disagreements after hours of talks in Moscow while signalling that neither side is giving up on improving relations soured by Russian hacking and deepening differences over Syria. Tillerson said “a low level of trust” exists between the 2 nations and conceded efforts must be made to mend relations that have sunk to a dangerously low level.
- Import prices in March fell 0.2% from a month earlier, its largest decline in 7 months, matching expectations. On a year-on-year basis, import prices rose 4.2%, exceeding the expected 4.0%.
- The US annual budget deficit held close to its highest level in 3 years during March. The deficit totalled $176.2 billion, up sharply from the $108 billion deficit in February.
- Bank of Canada Stephen Poloz said a rate cut is no longer on the table amid signs of an improving economy, even as he continued to cast doubt on the sustainability of the rebound. The BoC left its key rate unchanged at 0.50%, as expected, last night.
- The BoC is predicting the economy will return more quickly to full capacity, a key variable for policy makers since it’s the main driver of inflation. Poloz said the central bank has become “decidedly neutral” and didn’t consider the possibility of a rate cut, as it had earlier this year. Nevertheless, the central bank highlighted some cautions, citing weakness in the labor market, inflation data, exports and business investment.
- London’s housing market is in its worst slump since the financial crisis 8 years ago. The Royal Institute of Chartered said its price balance for the city fell to the lowest since February 2009 last month. It declined to minus 49, indicating a greater percentage of agents reported drops in March.
- Jobless claims in March rose 25,500, following a 6,100 drop in February. The ILO unemployment rate remained at 4.7%, as expected.
- Exports in March jumped 16.4% year-on-year in dollar terms, the most in 2 years, and beating the consensus 4.3% expectation. Imports increased 20.3%, higher than the 15.5% predicted.
- In yuan terms, exports and imports rose more than expected, gaining 22.4% and 26.3% respectively.
- Australian employment surged in March, underpinned by the biggest gain in full-time jobs in almost 30 years. 60,900 jobs were added last month, well above the 20,000 median estimate and improving upon February’s upwardly-revised 2,800 gain.
- Full-time jobs soared by 74,500, the biggest increase since December 1987; part-time employment fell 13,600.
- The jobless rate held at 5.9%, matching expectations. The participation rate edged higher to 64.8%, from 64.6% last month.
- Retail sales in February fell 2.5% from a year earlier, following a 2.3% gain in the month prior; economists were expecting a gain of 1.9%. Flagging sales at supermarkets and department stores contributed to the declined.
- Singapore’s economy expanded 2.5% year-on-year in the first quarter this year, losing some of its momentum from the previous quarter’s 2.9% expansion, and slightly lower than the 2.6% predicted. The services industry contracted an annualized 2.2% from a quarter ago, while manufacturing and construction fell 6.6% and gained 5.4% respectively, over the same period.
- On an annualized basis, GDP contracted 1.9% quarter-on-quarter, more than the 1.8% contraction expected, and sharply down from the prior quarter’s 12.3% expansion.
- GDP figures are often volatile in Singapore, since it’s small, open and largely dependent on exports. The city state was hit by a slump in global trade in recent years but has started to recover following a pickup in Chinese demand for electronics and other manufactured goods. Despite last quarter’s contraction, economists surveyed by Bloomberg are projecting a 2% expansion this year.
- Earlier today, the Monetary Authority of Singapore left monetary policy unchanged, as expected, and stated that the neutral stance is appropriate for an extended period of time.
- Spot gold extended its rally to fresh highs following a fall in Treasury yields on the back of Trump’s comments that the dollar is too strong. The precious metal advanced 1.1% to a session-high of $1,288.06/Oz earlier today.
- Having broken last week’s high, as well as its 200-day moving average in one go, the yellow metal looks poised to rise higher to $1,300/Oz over the medium term.
- Silver for immediate delivery broke above its $18.50/Oz resistance, advancing 1.2% to $18.5670/Oz.
- Crude oil futures expiring in May fell 0.5% overnight to $53.11/bbl, as concerns over rising US crude output countered the largest decline in stockpiles since December.
- Crude production climbed to the highest level in more than a year, according to a report from Energy Information Administration. Meanwhile, US inventories dropped by 2.2 million barrels last week, falling from a record and by more than forecast in a Bloomberg survey.
- Spot 1.3941
- USDSGD fell 0.6% to 1.3935, on the back of broad USD weakness today.
- The 5-month low of 1.3909 should act as a near-term support level.
- Spot 0.7576
- AUDUSD jumped 1.2% to 0.7580, after a better-than-expected jobs report in Australia. US dollar weakness today also contributed to the currency pair’s rally.
- Spot 1.3233
- USDCAD declined 0.7% to 1.3230, breaking below the support at 1.3288, following hawkish comments from the BoC yesterday.
- Spot 6.8747
- The PBOC earlier strengthened its yuan fixing by 0.42% – the most in almost 3 months, to 6.8651 to the US dollar.
- Trump’s overnight comments about not branding China as a currency manipulator are seen to lower the risk of China dumping its holding Treasuries in retaliation.
- USDCNH slid 0.4% to 6.8684, falling back below the key 6.9000 handle.
- Spot 108.82
- USDJPY extended declines, sliding 0.8% to 108.73 earlier today, the pair’s 200-day moving average.
- The pair should find some support around the current level, having declined almost 7% since the turn of the year.
- Spot 1.2560
- GBPUSD erased a previous day’s decline, rising 1.7% to 1.2574 earlier as a weaker US dollar continues to unwind the effect of a higher-than-expected jobless claims number in the UK yesterday. The 200-day moving average at 1.2627 remains as a point of resistance.