August 17, 2016

Daily Observations:

US stocks fell with Treasuries, while the dollar pared its decline, after Fed officials stoked speculation over interest-rate increases despite evidence of uneven growth in the US.

US:

  • The Fed’s New York President William Dudley said fed funds futures are under-pricing rate hikes, and tightening next month is possible. He further warned investors are underestimating and complacent about the need for rate hikes.
  • Atlanta’s Fed President Dennis Lockhart commented that the economy is strong enough for at least one more rate increase before the end of the year.
  • Headline CPI in July matched expectations and was stagnant from a month earlier, while core CPI rose 0.1% over the same period but was worse than the 0.2% rise expected. On a year-on-year basis, headline CPI was 0.8% higher, less than the 0.9% expected, while core CPI’s increment of 2.2% missed forecasts of 2.3% as well.,
  • Industrial production last month gained 0.7%, soundly beating the median consensus of 0.3%.
  • In a note to clients, Barclays says a recent shift in Fed rhetoric suggests policy is in “September or never” mode.
  • The FOMC is due to release its July meeting’s minutes tonight which could provide more clues regarding the trajectory of future rate hikes.
  • The S&P 500 Index fell 0.6% following Dudley’s comments last night. Phone and utilities shares led declines.
  • The US dollar pared its losses following hawkish comments from Dudley. The dollar had initially weakened to near 3-month lows after weaker-than-expected inflation numbers.
  • Yields on 10yr Treasuries rose 2bp to 1.57%, after rising 4bp during the previous session.

Canada:

  • Manufacturing sales in June jumped 0.8% from a month earlier, recovering from the previous month’s decline of 1.0%. Economists were expecting a rise of 0.5%.

UK:

  • Consumer prices in July rose 0.6% from a year earlier, faster than the 0.5% predicted by analysts. Stripped of food and energy, prices increase 1.3% over the same period, missing the consensus estimate of 1.4%.
  • Input costs jumped an annual 4.3%, ending 32 consecutive monthly declines, while import prices jumped the most since 2011.

China:

  • China’s regulators took another step toward opening their financial markets yesterday, unveiling the Shenzhen-Hong Kong stock connect, the second channel for foreign investors to buy the country’s stocks.
  • Authorities also said they will not be imposing the aggregate quota for the new stock connect when trading starts in the expected 4 months’ time. The cap between the existing connection of Shanghai and Hong Kong exchanges was also removed.

Singapore:

  • Non-oil domestic exports slumped 10.6% in July from a year earlier, its deepest decline in 4 months. Economists were predicting a 2.5% drop.

Precious Metals:

  • Spot gold decline 0.9% to $1,341.11/Oz, paring yesterday’s gains.
  • A major consolidation chart pattern has developed over the past 2 weeks. The key resistance at $1,375/Oz remains, while the level at $1,310/Oz is the next significant support.
  • Silver for immediate delivery slumped 1.7% to $19.7160/Oz.

Oil:

  • WTI futures expiring in September closed at its highest price in 5 weeks, 1.8% higher at $46.58/bbl, bolstered by a weaker US dollar and speculation that OPEC talks next month could result in a deal to stabilize prices via a freeze on output.
  • Russian Energy Minister Alexander Novak said the nation was open to cooperating to stabilize markets after Saudi Energy Minister Khalid Al-Falih commented talks in Algiers may result in action.

 

USDSGD:

  • Spot 1.3438
  • USDSGD rebounded sharply, rising 0.4% to 1.3440 earlier today despite hitting an almost 2-month low of 1.3348 last night.
  • Weaker-than-expected exports numbers released this morning has increased speculation that the MAS could ease as soon as October.
  • The August high of 1.3493 acts as the next resistance point.

 

AUDUSD:

  • Spot 0.7675
  • AUDUSD slid 0.8% to 0.7661 earlier on the back of a stronger US dollar overnight.
  • The currency pair is currently trading around a previously-broken resistance level of 0.7650.

 

USDCAD:

  • Spot 1.2872
  • USDCAD recovered most of its previous day’s 0.8% decline, gaining back 0.5% to 1.2894 earlier today.
  • The next key support remains at the 1.2800 handle.

 

USDCNH:

  • Spot 6.6374
  • The PBOC sets its fixing rate higher for the third day at 6.6056 against the dollar.
  • USDCNH rose 0.2% to 6.6393, rebounding off the 6.6228 support level.

 

GBPUSD:

  • Spot 1.3024
  • Yesterday’s inflation pickup has driven GBPUSD past the 1.3000 level. The currency pair was 0.7% higher at 1.3071 earlier today.
© 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