Issue#: 288/2017

Spot values at a glance:







Daily Observations:

Investors swung back into risk-taking mode on speculation that pro-growth centrist Emmanuel Macron will become France’s next president. Safe haven assets such as gold, Treasuries and the yen declined. Asian stocks remained mixed, as a sell-off in Chinese equities led to declines in equities in Singapore and Hong Kong, while indices in Sydney, Tokyo and Seoul held onto gains.


  • Centrist Emmanuel Macron and far-right nationalist Marine Le Pen won the first round of the French presidential election, triggering a runoff on May 7 between 2 radically different visions of the country’s future.
  • Macron finished with 23.5% of the votes, followed by Le Pen who garnered 22.1%. Fillon and Melanchon had 19.8% and 19.5% respectively. Fillon subsequently called for his supporters to vote for Macron in the second round while Melonchon refused to realign himself with any party.
  • An Ipsos poll is showing that Macron will defeat Le Pen 62-38 in the second round.


  • The White House will hold a briefing for senators with its ”four principals” on North Korea as the administration considers its options for dealing with Pyongyang, after a US citizen was detained over the weekend as he was leaving North Korea. The nation on Sunday said it was ready to sink a US carrier to show its military strength, Reuters news reported.
  • The government will offer “specific governing principles” for its tax plan this week along with indications of what rates would be, but a complete proposal probably won’t be ready until June, President Donald Trump’s budget director said. Trump had promised news about his tax plan this Wednesday, telling his 28 million Twitter followers on Saturday that “big tax reform and tax reduction will be announced” on Apr. 26.
  • The US dollar sold off earlier today, largely due to a strengthening euro; the Bloomberg Dollar Index gapped lower initially before erasing some of its losses, it remains 0.3% weaker.
  • Treasuries dropped across the curve following Macron’s win in the first round of Franc’s presidential election, easing demand for safer assets. The benchmark 10yr Treasury yield gapped higher by as much as 7bps to 2.32%
  • US equities fell Friday, but closed off the lows of the day following President Trump’s promise of a much-awaited tax overhaul. Renewed risk-taking sentiment following the French election results earlier today have propelled S&P 500 futures higher, gapping up by more than 1% this morning.
  • The preliminary figure for the Markit US manufacturing PMI in April fell to 52.8 from 53.3 in March, missing the consensus estimate of 53.8. Services PMI fell as well, sliding to 52.5 from 52.8, worse than the predicted 53.2 reading.
  • Billionaire investor Paul Tudor Jones said earlier this month at a Goldman Sachs conference that the value of the stock market relative to the size of the economy should be “terrifying” to Janet Yellen, voicing what many hedge fund and money managers are privately warning investors – stocks are trading at unsustainable levels; a few traders have been more explicit, predicting a sizeable sell-off by the end of the year.


  • CPI in March rose 1.6% year-on-year, slowing from a 2.0% gain in the month prior and less than the median estimate of 1.8%. Prices rose 0.2% on a monthly basis, lagging the 0.4% consensus forecast.
  • Measures of core prices also slowed, underlining Bank of Canada Governor Stephen Poloz’s recent concerns that excess slack remains in the economy.


  • Retail sales in March fell 1.8% from a month ago and rose 1.7% from a year ago, missing the consensus estimates of -0.5% and 3.3% respectively.
  • Stripped off the effects of auto fuel, retail sales disappointed as well – falling 1.5% month-on-month versus a 0.5% fall expected, and rising 2.6% year-on-year versus a 3.8% gain predicted.


  • Chinese stock fell the most in 3 months earlier today, amid heightened regulatory scrutiny and a crackdown on leveraged trading. China’s banking regulator, which said late Friday that it will focus on guarding against financial risks, has ordered local units to assess cross-guaranteed loans, according to a Caixin report.
  • The Shanghai Composite declined by as much as 1.9% before paring back some of its losses and is currently lower by around 1.5%. Traders will be watching to see if the index pares losses to less than 1% by the close, as has been the pattern lately; the index has gone 86 sessions without a loss of more than 1% by the close, its longest stretch since 1992.

Precious Metals:

  • Spot gold sank by the most in more than 7 weeks, falling by as much as 1.5% to $1,265.51/Oz at its open this morning after investor demand for safe haven assets were dampened on the back of the French presidential election’s first round results.
  • The precious metal is expected to be supported above its key 200-day moving average at $1,255.27/Oz; to the upside, the psychological resistance at $1,300/Oz remains.
  • Silver for immediate delivery fell to its lowest in almost a month, 1.5% lower at $17.6570/Oz.


  • Crude oil futures expiring in June fell 2.2% in New York on Friday, before paring some of its declines earlier today and rising 0.7% to $49.95/bbl. Oil’s rally has faltered of later amid concern rising US production will offset efforts by OPEC to trim a global glut.

An OPEC technical committee concluded last week that a 6-month extension of output cuts would be necessary, according to delegates with knowledge of the matter, Bloomberg reported.


  • Spot 1.3946
  • USDSGD fell 0.4% to an intraday low of 1.3923 before paring some of its decline. The pair is set to close below its 200-day moving average for the first time in 6 months.
  • The 5-month low of 1.3909 acts as the next key support level. To the upside, the next resistance is at 1.4082.



  • Spot 0.7556
  • AUDUSD opened with a gap of 0.7% to 0.7592 on the back of the French election results, but the pair has since closed the gap, settling back around its 200-day moving average of 0.7552.



  • Spot 1.3481
  • USDCAD remained capped at the 1.3500 handle, following crude oil some of its paring losses earlier today.
  • The major resistance level at 1.3600 – a 14-month high, looms ahead.



  • Spot 6.8853
  • The PBOC earlier strengthened its reference rate by 0.22% to 6.8673 to the US dollar, from 6.8823 last Friday.
  • USDCNH erased an earlier session decline to revert back above the 6.8800 handle; the pair has been trading in a narrow range over the past week.



  • Spot 110.03
  • USDJPY gapped up by as much as 1.4% to 110.64, before paring back to the 110 handle on profit-taking as investor focus shifted from the French election back to geopolitical concerns.



  • Spot 1.2790
  • GBPUSD declined 0.3% to 1.2780, reversing earlier session gains.
  • The momentum continues to remain to the upside, with the 200-day moving average of 1.2616 acting as key support level moving forward. The 1.3000 psychological level could provide some short-term resistance, but over the longer-term, the key level to watch is 1.3500.
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