Daily Observations:

Most Asian equities accompanied the S&P 500 Index into the red earlier today, with Shanghai stocks extending upon Monday’s 2.5% slump as investors weighed the impact of monetary tightening in the US and China amid fragile economic recoveries. Government bonds consolidated near their lows following a two-month long slide, while gold maintained above the $1,150 handle.

US:

  • The S&P 500 Index fell 0.1% in New York, slipping for the first time in seven days and gaining 3.1% last week. Energy stocks jumped together with utilities, but were offset by losses in bank shares and consumer discretionary stocks.
  • Citibank forecasts the Fed sticking to a two-hike scenario for 2017, in line with 65% of respondents in the bank’s latest CitiFX poll, according to a note to clients yesterday.
  • Bloomberg’s Fed funds futures pricing data indicate a 100% chance of a rate hike by the Fed later this week, and a two-in-three chance of additional policy tightening by June next year.
  • The benchmark 10yr Treasury yield rose by as much as 6bps to 2.53% before paring its advance to close 1bp higher at 2.47% in New York.
  • Hedge funds and other large speculators raised bearish bets on 10yr Treasuries to the highest level in almost 2 years last week.
  • The US dollar weakened overnight, as oil-exporting currencies continued gains over the greenback. The Bloomberg Dollar Spot Index, which tracks the USD against 10 major peers, slipped 0.6%.
  • Goldman Sachs’ Gary Cohn has been named as the top chief economic policy adviser for President-elect Donald Trump, and will head the National Economic Council.

UK:

  • The Chancellor of the Exchequer Phillip Hammond said to the parliament’s treasury committee yesterday that it looks increasingly likely that the UK will look to engage in a longer transitory period away from the EU, adding that there is a growing consensus from both sides that a longer transitory period will be mutually beneficial.

China:

  • China’s economic stabilization held in November, offering policy-makers more room to switch focus away from stimulus and towards curbing financial risks.
  • Industrial production climbed 6.2% from a year earlier, slightly better than the 6.1% predicted.
  • Retail sales improved 10.8% year-on-year, exceeding October’s gain of 10.0% and the median estimate of 10.2%.
  • Fixed asset investment increased 8.3% in the first 11 months of this year, maintaining the same pace last month and matching expectations.
  • Home sales rose 16% from a year earlier, the slowest pace this year, according to Bloomberg calculations based on the government data released earlier today, as renewed property curbs in red-hot markets continue to damp demand.
  • The Chinese economy has remained resilient in the current quarter as exports were cushioned by a weaker yuan and factory prices snapped out of their deflationary funk. With the expansion on pace to land in the middle of the government’s 6.5% – 7.0% full-year target, attention is shifting to curbing excess corporate borrowing and industrial capacity and reining in surging property prices.

Japan:

  • October machine orders rose 4.1% month-on-month and fell 5.6% year-on-year, with the former beating the consensus estimate of 1.1% and the latter missing the median forecast of -4.9%.
  • PPI in November gained 0.4% from a month earlier, and declined 2.2% from a year earlier, exceeding estimates of 0.3% and -2.3% respectively.

Precious Metals:

  • Spot gold rebounded off a session low of $1,151/Oz and was 0.9% higher at $1,165.92/Oz last night.
  • With the $1,170/Oz support breached recently, the next level comes in at $1,145/Oz; the previous support of $1,200/Oz now acts as a key point of resistance.
  • Spot silver neared a non-month high, and traded 1.6% higher to $17.2008/Oz last night.

Oil:

  • Crude oil for January delivery pared earlier gains of as much as 5.8% to close 2.6% higher for the sessions, at $52.83/bbl, the highest close since June.
  • The recently-struck deal between OPEC members and outside nations, including Russia, was agreed at a meeting in Vienna over the weekend, and is set to usher in the first global petroleum cuts in 15 years, covering about 60% of global output.

 

USDSGD:

  • Spot 1.4248
  • USDSGD declined 0.5% to 1.4227 following overnight USD weakness.
  • The currency pair seems to be undergoing some consolidation at the moment, following a break-out above the previous resistance of 1.3850 in October.

 

AUDUSD:

  • Spot 0.7614
  • AUDUSD advanced 0.6% to a session-high of 0.7514, although the currency pair has settled back towards the 0.7500 resistance handle.
  • The currency pair has been struggling to trade above the 0.7500 level since mid-November.
  • Support levels below come in at 0.7259 and 0.7145.

 

USDCAD:

  • Spot 1.3126
  • USDCAD was largely unchanged earlier today, despite USD weakness and stronger crude oil prices overnight.
  • The Canadian dollar has advanced almost 3% against the US dollar over the past 2 weeks.
  • The next test for the currency pair comes in at its 200-day moving average of 1.3078.

 

USDCNH:

  • Spot 6.9293
  • The PBOC raised its fixing earlier today, by 0.22% to 6.8934 per US dollar.
  • USDCNH fell 0.3% to 6.9181, following a higher yuan fixing and USD weakness overnight. Slightly better-than-expected economic data from the world’s second-largest economy earlier today has also helped buoy demand for the yuan.

 

USDJPY:

  • Spot 115.05
  • USDJPY rebounded off the key resistance level of 116.00 overnight, and traded 0.9% lower at 114.74 earlier today.
  • Short-term support is likely to be found above the 113.00 handle.

 

GBPUSD:

  • Spot 1.2680
  • GBPUSD gained 0.9% to 1.2700, after comments from Hammond that odds of a longer transitory exit from the EU are higher.
  • The currency pair is likely to test its two month-high of 1.2775 again soon. 1.2800 acts as an important resistance handle, while the key support at 1.2300 remains.
© 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