Daily Observations:

Most Asian stocks advanced amid a surge in government debt after yesterday’s Bank of England’s more-dovish-than-expected policy easing eased concerns over the impact of Brexit. Oil held above $41/bbl while the US dollar was mostly steady as investors looked ahead to tonight’s nonfarm payrolls data.


  • US factory orders in June fell 1.5% month-on-month, less than the 1.9% drop expected. Durable goods orders declined 3.9% over the same period, a touch less than the 4.0% fall anticipated.
  • Initial jobless claims last week rose 3,000, slightly more than the 1,000-decline estimated.
  • The S&P 500 Index was virtually unchanged, as investors looked past yesterday’s more-dovish-than expected BOE decision to tonight’s US nonfarm payrolls.
  • The Bloomberg Spot Dollar Index, a gauge of the greenback against 10 major peers, remained largely unchanged this morning, after creeping up 0.1% in the previous session.
  • Treasuries rose, with yields on notes due in a decade falling 4bps to 1.50%.
  • US nonfarm payrolls tonight will be significant as a more-positive-than-expected report will likely increase the probability of a rate hike in September.


  • The BOE cut rates by 25 bps to 0.25%, as expected. They also announced additional assets purchases of £70 billion, including £10 billion of corporate-bond purchases.
  • A term funding scheme will also be launched to provide up to £100 billion of funding for banks at rates close to bank rate in order to dilute the adverse effects of lower rates on bank profitability, as well as to ensure banks pass on the full 25bps rate cut to borrowers.
  • Governor Carney added that the BOE had scope for more stimulus in the form of rate cuts and quantitative easing, but he ruled out negative rates and helicopter money due to their “negative consequences”.
  • Sterling tumbled while gilt yields fell to a record low of 64 bps.
  • The BOE left its forecast for the year unchanged at 2.0%, but downgraded 2017 growth from 2.3% to 0.8%.


  • In its quarterly statement released today, the RBA said the outlook for the Aussie and China are key uncertainties to Australia’s growth and inflation forecasts, which remained unchanged.
  • Annual growth this year is predicted to come in at 2.5% – 3.5%, and accelerating to around 3% – 4% in 2018.
  • There was little near-term change for unemployment and core inflation is expected to remain below 2% for most of the forecast period through 2018.
  • No forward interest rate guidance was issued.

Precious Metals:

  • Spot gold pared previous session’s losses, climbing 0.9% to $1,365.13/Oz last night. Immediate support and resistance remains at $1,335/Oz and $1,375/Oz respectively.
  • Silver for immediately delivery rebounded as well following its previous session’s 1.9% slump; the precious metal rose as much as 1.5% but failed to hold above the $20.50/Oz level.


  • WTI oil futures expiring in September rallied 2,7% to settle at $41.93/bbl after US government data showed gasoline stockpiles fell by 3.3 million barrels last week, the most since April.
  • Oil is headed for its first weekly gain in three.



  • Spot 1.3416
  • USDSGD remained mostly unchanged ahead of tonight’s jobs report data. The 1.3400 level continues to act as a strong support level.



  • Spot 0.7661
  • AUDUSD rallied 0.7% to 0.7663, near 3 month highs, after the RBA’s release of its quarterly statement and iron ore futures climbed to near 2016 highs.
  • Traders have reduced the probability of another rate cut this year by less than 50%.



  • Spot 1.3022
  • Canada’s jobs report is due for release tonight as well, which means the USDCAD pair could potentially move.
  • USDCAD was 0.7% lower overnight, but managed to stay supported by the 1.3000 handle.



  • Spot 6.6512
  • The PBOC sets its fixing rate 0.06% stronger to 6.6406 against the dollar, after most Asian currencies rose overnight following BOE stimulus yesterday and ahead of US NFP tonight.
  • USDCNH edged 0.1% higher above the 6.6500 level earlier today.



  • Spot 1.3134
  • GBPUSD was the big mover overnight, sliding as much as 1.3% lower to 1.3103. The 1.3050 support remains to be tested.


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