August 11, 2016

Daily Observations:

Crude oil extended its sell-off during Asian trading, weighing on stocks amid resurgent concerns over a global supply glut. New Zealand’s dollar jumped despite the RBNZ cutting rates by 25bps, while the US dollar pared back some of last night’s losses. Gold retreated back below $1,350/Oz,

US:

  • The S&P 500 Index slid 0.3%, dragged down by energy producers and banks, after reaching its all-time high of 2187.66 on Tuesday.
  • The US dollar weakened overnight; Bloomberg’s Spot Dollar Index declined to close 0.4% lower in New York, its lowest close since June 23rd.
  • The US Treasury 10yr auction drew near-record demand from indirect bidders including central banks and produced its lowest yield since 2012. Treasury yields fell across the curve after the strong sale, with 10yr yields sliding 4bp to 1.51%, retesting the psychological support of 1.5%.

Canada:

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

UK:

  • The BOE said Wednesday it will deal with a £52 million shortfall in an operation on Tuesday at a later date as it made no chances to the £60 million measure. Some analysts have attributed the shortfall to thin summer liquidity and some traders being on holiday.
  • 10yr gilt yields fell as much as 0.512% to an all-time low after the BOE failed to find enough sellers of long-dated gilts yesterday to match its bond-buying effort.

China:

  • China’s official bad-loan ratio held at 1.75% in 2Q after almost 3 years of increases, suggesting some progress as officials try to defuse risks from the nation’s explosion in credit. There is, however, some doubts from analysts regarding the accuracy of the figure.

New Zealand:

  • The RBNZ disappointed dovish expectations despite cutting its benchmark rate by an expected 25bps to 2.00%.
  • Investors had priced in a 20% chance of a 50bp-cut while the market is already pricing in a 34% chance of a rate cut during the next meeting in September.
  • The New Zealand kiwi strengthened as much as 1.4% following the decision.

Singapore:

  • 2Q GDP expanded 2.1% year-on-year and at an annualized 0.3% quarter-on-quarter, lower than the consensus forecasts of 2.2% and 0.8% respectively.
  • Compared to the first quarter, manufacturing growth weakened while construction grew at a faster pace. Services declined for the second quarter in a row.
  • The MAS signalled that it’s not ready for a second-round of easing following its unexpected move in April.

Precious Metals:

  • Gold for immediate delivery pared previous session’s gains, sliding 0.8% to $1,341.74/Oz this morning.
  • Spot silver retreated as well, by 1.2% to $20.0473/Oz following yesterday’s 3.1% gain.
  • Palladium touched a 1-year high as stronger Chinese car sales added to concerns over insufficient supply of the commodity used to reduce pollution from vehicles.

Oil:

  • Crude oil futures expiring in September fell 2.5% to $41.71/bbl., after US weekly oil inventories posted a surprise gain of 1.06 million barrels instead of the expected gain of 1.5 million barrels, according to an Energy Information Administration report.

 

USDSGD:

  • Spot 1.3423
  • USDSGD rebounded off the 1.3400 support level, rising 0.25% to 1.3427.
  • The 1.3400 support has been tested numerous times over the past 4 months; a break below it could potentially result in the currency pair quickly testing the next level of 1.3150.

 

AUDUSD:

  • Spot 0.7706
  • AUDUSD pared some of its gains following the 0.8% up-move the previous session. The currency pair was 0.4% lower at 0.7696 this morning.
  • The 2016-high of 0.7835 acts as the next key resistance level.

 

USDCAD:

  • Spot 1.3061
  • Crude oil’s overnight slide and a strong support at 1.3000 resulted in USDCAD gaining 0.4% this morning.
  • The currency pair has mostly ranged between 1.3000 and 1.3200 the past 2 weeks.

 

USDCNH:

  • Spot 6.6444
  • The PBOC sets its fixing rate 0.41% stronger to 6.6255 against the dollar, the most since June 23rd.
  • USDCNH rose 0.1% to 6.6458, following yesterday’s 0.5% drop.

 

GBPUSD:

  • Spot 1.3006
  • GBPUSD was 0.6% lower at 1.2991 earlier today, with the psychological 1.3000 level barely holding.
  • The next support comes in at 1.2798.

 

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