Daily Observations:

Asian stocks slipped, taking their cue from a weaker US equities session, as a rising yen weighed on shares in Tokyo. Gold extended gains while oil held onto Monday’s losses.


  • Last month’s official ISM unexpectedly declined to 57.2, from 57.7 in February, matching expectations. Markit’s version of ISM unexpectedly edged lower to 53.3, from 53.4 in the month prior, missing out on the expected figure of 53.5.
  • Construction spending in February gained 0.8% month-on-month to near an 11-year high of $1.2 trillion, although it was less than the 1.0% rise predicted.
  • US auto sales, adjusted for seasonal trends, slowed to 16.6 million in March, from 16.7 million a year ago, according to researcher Autodata Corp, missing out on an expected gain to 17.2 million.
  • US equities declined Monday, as the S&P 500 Index ended 0.2% lower, after earlier reversing a decline of as much as 0.8%. Automobiles led declines as an industry group, falling 2.3%.
  • US yields were driven to the lowest since end-February, falling 7bps to 2.32% in New York before paring some of its losses in Asia this morning.
  • The US dollar was little changed earlier today, after its recent rally from its lows a week ago stalled. The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, erased last night’s slight gain this morning, falling 0.1%.
  • The Fed’s New York President William Dudley said the rising burden of student debt is weighing on interest rates in the US, and it would be a “reasonable conversation” for policy makers to explore making college tuition free. He added that the growing pile of student debt is “obviously one headwind to economic activity” that “probably pushes in that direction of lower equilibrium real rates” because it limits households’ spending power.


  • March PMI gained to 55.5 from 54.7 in February; no estimates were provided.


  • UK PMI in March declined unexpectedly to 54.2, from 54.5 in February, faring worse than the consensus estimate of 55.0 and declining for a third straight month.


  • Trade surplus in February rose to AUD 3.55 billion, the largest ever reported, and well above the consensus of AUD 1.90 billion; exports rose 1% while imports tanked 5%. The sharp rise in exports also indicates strength in the Chinese economy, being Australia’s largest trading partner.
  • The RBA is expected to keep its cash target rate on hold at 1.50% when it concludes its policy meeting later today. According to a Bloomberg Intelligence report, the risk of another rate cut has diminished greatly with brighter signals from recent economic data. Yet, the trade-weighted AUD remains strong, rising 1.5% against the USD since mid-December despite the Fed tightening twice since then. It is worth noting the RBA has cut rates in the past to check the Australian dollar’s gains.


  • PMI for March unexpectedly rose to 51.2, from 50.9 in February, surpassing the decline to 50.8 predicted.
  • The electronics sector index last month rose to 51.8, from 51.4 prior.
  • 1Q 2017’s private home prices monitored by the Urban Redevelopment Authority slid 0.5% quarter-on-quarter, for the second consecutive quarter.

Precious Metals:

  • Spot gold looks poised to snap a 5-day losing streak, rising 0.9% to $1,257.19/Oz in Asia this morning, and looks set to test its 200-day moving average at $1,260/Oz for the third time in almost a month. A convincing break above said resistance level should propel the yellow metal higher to the psychological $1,300/Oz handle.
  • Silver for immediate delivery gained 0.9% to $18.3189/Oz, its highest level since Mar. 3. The $18.50/Oz resistance remains the next level to be tested.


  • Crude oil futures expiring in May fell for the first time in 5 sessions, ending 0.7% lower at $50.24/bbl in New York.  While OPEC output fell by 200,000 barrels a day in March, the decline was helped by cuts in Nigeria and Libya that are exempt from its production-curb deal to shrink global glut, Bloomberg news reported. Libya was said to resume pumping at its biggest field after about a week of disruption that had helped boost prices.



  • Spot 1.3970
  • USDSGD continues to be bound between its 200-day moving average, currently at 1.3927, and the 1.4000 resistance level. The pair was 0.1% lower at 1.3959 today.
  • The general view that the central bank will refrain from easing monetary policy this month has provided renewed demand for the Singapore dollar, and drove the USDSGD pair below the key 1.4000 level 2 weeks ago.



  • Spot 0.7604
  • AUDUSD remained little changed earlier today around its 0.7600 handle, following a 0.9% decline over its past 2 sessions.
  • The 0.7600 support handle has held over the past 3 weeks. A more-dovish-than-expected statement from RBA Governor Lowe post-policy decision could drive the pair below it to 0.7500.



  • Spot 1.3381
  • USDCAD gained 0.4% to 1.3400 overnight, before paring back some of its gains earlier today. The pair has been trading within the tight range of 1.3300 and 1.3400 over the past 3 weeks.



  • Spot 6.8734
  • USDCNH was little changed due to the national holiday of the Ching Ming Festival in China today.



  • Spot 110.56
  • USDJPY slumped 0.9% to 110.48 earlier and looks set to retest last month’s low, following poorer-than-expected auto manufacturers’ sales in the US for March.
  • The risk for USDJPY continues to remain to the downside. The currency pair spent most of the past months within the 111.60 – 115.60 range, and following a breakout of its lower boundary last month, could fall further to its 200-day moving average of around 108 over the medium term.



  • Spot 1.2493
  • GBPUSD pared losses from as much as 0.3% overnight, and is currently retesting its 1.2500 handle.
  • Focus now shifts towards the UK construction PMI data due later for fresh impetus on the economy. Also, tonight’s US trade and factory orders data will be closely eyed as well.
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UEN: 201419754M

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