Daily Observations:

The dollar weakened on speculation the Fed will be slow to raise interest rates amid uneven global growth, reigniting demand in safe haven assets in gold and government bonds. Asian stocks were mostly higher, with the MSCI Asia Pacific Index up 0.3% amid optimism central banks from London to Tokyo will keep expanding stimulus. While better-than-expected US jobs data briefly buoyed the dollar on Friday, odds of the Fed hiking in 2016 remained below 50% amid evidence of faltering growth elsewhere.


  • Nonfarm productivity in 2Q fell 0.5% from the previous quarter, missing expectations of a 0.4% gain; this is the third consecutive quarterly decline.
  • Wholesale inventories for June unexpectedly climbed 0.3% month-on-month, outpacing gains in the 0.2% gain in May; inventories were expected to stay stagnant in June.
  • The S&P 500 Index rose less than 0.1% amid low volume, and has increased on 4 out of the last 5 sessions, pushing its 2016 advance to 6.7%.
  • Almost 90% of S&P 500 companies have posted 2Q earnings with about 77% exceeding profit expectations, and 56% topping projections for sales. Analysts have tempered their estimates for the decline in 2Q earnings to 2.7%, versus a 5.8% drop foreshadowed a month ago.
  • Hedge funds have amassed the largest short position on the VIX in 3 years, a bet on a further rally in stocks. Net short positions on the CBOE VIX futures amounted to 115,000 contracts, Bloomberg data showed.
  • The Bloomberg Spot Dollar Index, a gauge of the greenback against 10 major peers, fell 0.3% earlier today to near six week lows, extending losses from the previous day’s 0.3% decline.
  • Treasury yields fell across the curve, helped by a rally in gilts and the strongest US 3-year auction since December. 10yr yields fell 5bps to 1.55%.


  • Housing starts in July fell to 198,400 units from 218,300 in June, beating the 191,000 units surveyed by analysts.


  • The BOE failed to find enough long-dated bonds to buy in its expanded QE program in order to reach its stated £1.17 billion-target. 10yr and 30yr gilt yields fell to record lows. The central bank is slated to announce its response to the shortfall later today.
  • Industrial production in June rose 0.1% month-on-month and 1.6% year-on-year, matching expectations.
  • Manufacturing production missed estimates of -0.2% month-on-month and 1.3% year-on-year, coming in at -0.3% and 0.9% respectively.
  • Britain posted its largest trade deficit since the end of 2013 in the second quarter, as net trade continued to weigh on economic growth. The gap widened to £12.4 billion from £11.5 billion the prior month, as imports of goods and services increased slightly faster than exports.


  • In his final speech earlier today, departing-RBA Governor Stevens reiterated that monetary policy alone is unable to “dial up the growth” Australia needs; and that utilizing fiscal policy to finance infrastructure would be a useful adjunct to supporting growth.


  • DBS CEO Piyush Gupta’s defence of his bank’s handling of loans to Swiber Holdings has failed to ease some analysts’ concerns that more losses could emerge from financing the struggling energy-services industry.
  • The consensus analyst rating on the bank has dropped to the lowest in almost 7 years, according to Bloomberg data.
  • At Monday’s briefing, Gupta said NPL ratio is unlikely to exceed 1.4% for 2016, compared with 1.1% at the end of June.

Precious Metals:

  • Gold for immediate delivery advanced 1.2% earlier today back towards the $1,350/Oz handle, following its recent post-NFP decline.
  • Spot silver reacted similarly, rising 1.9% above the $20/Oz handle this morning.
  • Both precious metals are in the middle of their respective consolidation ranges established since early July. For further upside, a weaker US dollar would be necessary.


  • WTI oil futures expiring in September fell 0.6% to $42.77/bbl after the US Energy Information Administration raised its crude production forecast through 2017 in its monthly outlook.



  • Spot 1.3398
  • The Singapore dollar strengthened, after an unexpected decline in US 2Q productivity weighed on the greenback overnight.
  • USDSGD fell 0.6% back towards the 1.3400 support level earlier today.



  • Spot 0.7694
  • A weaker US dollar drove the AUDUSD pair up to 4 month-highs. The currency pair rose 0.5% to 0.7707 earlier this morning.
  • The 2016-high of 0.7835 acts as the next key resistance level.



  • Spot 1.3067
  • USDCAD was 0.8% lower at 1.3052, due to US dollar weakness overnight.
  • The currency pair has mostly ranged between 1.3000 and 1.3200 the past 2 weeks.



  • Spot 6.6523
  • The PBOC sets its fixing rate 0.1% stronger to 6.6530, the most in a week following a softer US dollar overnight.
  • USDCNH fell 0.3% to 6.6488.
  • Onshore CNY gained the most in 2 weeks on bets Chinese policy makers are focusing on exchange-rate stability as the economy shows increasing signs of a recovery.



  • Spot 1.3068
  • GBPUSD rebounded 0.8% to 1.3090, following its 0.7% slide to 1.2984 during the previous session.


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UEN: 201419754M

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