Issue#: 284/2017

Spot values at a glance:

USDSGD

USDCNH

AUDUSD

USDJPY

USDCAD

GBPUSD

Daily Observations:

Asian stocks were mixed, with indices in Sydney, Hong Kong and Shanghai lower and equities in Singapore, Tokyo and Seoul higher. Iron ore extended its price slump; other commodities such as gold, crude oil and copper were lower as well.

Geopolitics:

  • The US has gotten encouraging signs that China will act to pressure Kim Jong Un’s regime to dismantle its nuclear weapons program, a State Department official said, but the Trump administration is holding on to military action, alone or with allies, as an option.
  • Russian state television pronounced US President Donald Trump as “more dangerous” than North Korean leader Kim Jong Un, describing him as “more impulsive and unpredictable”. The message of disappointment with Trump has been building on state media for weeks; a survey by state-run pollster VTsIOM released Monday found that 39% of Russians hold a negative opinion of Trump, compared to only 7% in March.

US:

  • US Treasury Secretary Steven Mnuchin, in an interview with the Financial Times, said “over long periods of time the strength of the dollar is a good thing”. He also added that the goal of getting tax legislation passed by August is “highly aggressive to not realistic at this point” and is probably delayed due to healthcare.
  • The US dollar pared earlier session losses, with the broader Bloomberg Dollar Spot Index rising by as much as 0.1% this morning.
  • US Treasuries reversed gains following Mnuchin’s comments; the benchmark 10yr Treasury yield recovered to close 1bp higher in New York at 2.25% by the session’s close, up from 2.20% at its open.
  • US stocks rose the most in 6 weeks, as all groups in the S&P 500 Index advanced, while the Dow Jones Industrial Average added almost 200 points. Both indices ended 0.9% higher, with financial shares leading gainers.
  • The US Empire State manufacturing survey of general business conditions fell to 5.2 this month, from 16.4 in March and missing the consensus estimate of 15.0.
  • The US trade relationship with South Korea is “falling short” with the free-trade deal between the countries under review, Vice President Mike Pence said Tuesday. Pence had called the trade gap with South Korea a “hard truth”, with “too many” barriers to entry for US businesses.

Japan:

  • Japan wants to keep Commerce Secretary Wilbur Ross out of an economic dialogue with the US as it seeks to avoid disputes with the Trump administration over a weaker yen and trade imbalance, according to an official who requested anonymity, Bloomberg news reported. Ross, seen as a hardliner on trade issues, is set to be left out of the formal dialogue between Vice President Mike Pence and Japanese Deputy Prime Minister Taro Aso, another official revealed.

China:

  • China’s outward direct investment continued to slump in March, dropping to $7.11 billion or 30.1% lower from a year earlier, the Ministry of Commerce said earlier today, as foreign acquisitions remained under tight scrutiny amid efforts to curb capital outflows.
  • The slump follows record overseas purchases last year, when firms snapped up everything from soccer teams to property. Authorities have been tightening capital controls to help stabilize the currency after the yuan in 2016 posted its biggest annual drop in 20 years.

Australia:

  • In its minutes of this month’s policy meeting, the RBA noted that labor market conditions were “somewhat weaker than had been expected” and measures of underemployment “remained high”. In a new addition to its outlook, the RBA added that developments in the labor and housing markets warranted careful monitoring over the coming months.
  • The central bank reiterated that headline inflation is likely to accelerate to above 2% this year due to higher oil prices, but the return of core prices to the RBA’s 2-to-3% target would take longer.

Singapore:

  • According to a note to its clients, Standard Chartered said it’s unlikely that improvement in Singapore’s growth-inflation dynamics and exports can be sustained, as recent increases in inflation and inflation expectations has been a result of supply-side considerations and doesn’t indicate stronger domestic demand. In addition, China’s stronger demand for Singapore exports is due to inventory restocking, and not growth acceleration.

Precious Metals:

  • Spot gold retreated from a 5-month high, just shy of the $1,300/Oz resistance, amid a firmer dollar and higher US Treasury yield today. The precious metal fell 0.7% to $1,281.45/Oz earlier. However, simmering geopolitical tensions over North Korea should still buoy demand for gold, with the key support at $1,260/Oz expected to hold.
  • Silver for immediate delivery declined 1.2% to $18.3642/Oz, falling back below the key $18.50/Oz level.

Oil

  • Crude oil futures expiring in May edged 0.2% lower to $52.56/bbl earlier today, ahead of government data, due later today, forecasted to show US crude stockpiles fell by 1.7 million barrels last week.
  • Saudi Arabian Oil Co. Chief Executive Officer Amin Nasser said the global oil market is moving closer to balance despite the US shale boom.

USDSGD:

  • Spot 1.3978
  • USDSGD bounced off its 200-day moving average, gaining 0.2% to 1.3987 on the back of overnight USD strength.
  • The 5-month low of 1.3909 acts as the next key support level. To the upside, the next resistance is at 1.4085.

 

AUDUSD:

  • Spot 0.7559
  • AUDUSD slid 0.5% to 0.7553, retreating from the 0.7600 handle following the release of the RBA’s minutes from its most recent meeting flagging concerns in the housing and job markets.
  • The continued slump in iron ore prices further contributed to Aussie dollar weakness; iron ore futures slid in Asian trading after the commodity dropped to a 5-month low yesterday.

 

USDCAD:

  • Spot 1.3335
  • USDCAD erased previous day’s declines, rising 0.3% to 1.3334 earlier.
  • Continued USD weakness, coupled with CAD strength after the BoC last week took the possibility of a rate cut off the table, may drive the currency pair lower to test its 200-day moving average of 1.3227 again.

 

USDCNH:

  • Spot 6.8853
  • The PBOC earlier weakened to 6.8849 to the US dollar, from 6.8785 yesterday.
  • USDCNH edged 0.1% higher to 6.8873 earlier, gaining past its 100-day moving average.

 

USDJPY:

  • Spot 109.05
  • USDJPY continues to be buoyed by dollar-supportive comments from the US Treasury Secretary Mnuchin but gains are capped by geopolitical worries. The pair rose 0.8% to 109.22 earlier, regaining back above the key 200-day moving average.

 

GBPUSD:

  • Spot 1.2596
  • GBPUSD advanced 0.4% to 1.2596, and looks poised to retest the 1.2600 resistance.
© Jachin Capital Pte Ltd

UEN: 201419754M


The contents of this document are for information only and is taken or compiled from sources that we, Jachin Capital Pte Ltd, believe to be reliable. To the maximum extent permitted by law, we do not make any representation or warranty (express or implied) that this information is accurate, timely or complete and it should not be relied upon as such. Opinions expressed are our current opinions as at the date of this document only and are subject to change without notice. We endeavour to update on a reasonable basis the information discussed but regulatory, compliance or other reasons may prevent us from doing so. The publication and distribution of this document is not and does not imply any form of endorsement of any person, entity, service or product described or appearing here. This is not and does not constitute or form an offer to buy or sell nor the solicitation of an offer to buy or sell any security or financial instrument nor to participate in any particular trading or investment strategy. We are not soliciting any action based on this document. The information, services and products described or appearing here are intended only for Accredited Investors (as currently defined in the Securities and Futures Act) and are not intended for nor targeted at the public in any specific jurisdiction. This information does not take into account the particular investment objectives, financial situations or needs of individual investors. Investors should seek independent financial, tax or legal advice or make independent investigations as considered necessary or appropriate before making an investment decision. Investments involve risk. Any past performance, projection, forecast or simulation of results is not necessarily indicative of the future or likely performance of any investment instrument.

Essential SSL