Daily Observations:

Asian stocks fed off an overnight US equities rally, as crude oil and gold retreated. The Aussie dollar weakened after 3Q GDP contracted by the most since 2008. Analysts forecast policy-makers in India to cut key interest rates later today, and the ECB to extend its bond-buying program tomorrow beyond its current March end date.

US:

  • Factory orders grew 2.7% in October from a month earlier, beating estimates of 2.6% while the prior figure of 0.3% was revised upwards to 0.6%.
  • 3Q nonfarm productivity gained 3.1% quarter-on-quarter, less than the 3.3% predicted.
  • The trade deficit in October rose to $42.6 billion, from 36.2 billion, more than expected, and registering the steepest month-on-month increase since March 2015. Exports fell 1.8% due to declining shipments of soybeans, corn and consumer goods; imports rose 1.3% due to pharmaceuticals, mobile phones and capital goods.
  • The higher-than-expected trade deficit prompted the Atlanta Fed to lower 4Q GDP estimates, from 2.9% to 2.6%; Barclays and Goldman Sachs lowered their own estimates as well.
  • SoftBank Group’s CEO told Donald Trump he would create 50,000 new jobs in the US through a $50 billion investment in start-ups and new companies. The money will come from SoftBank’s previously announced $100 billion technology fund, which has a $45 billion commitment from the government of Saudi Arabia.
  • The S&P 500 Index rose 0.3% while the Dow Jones made yet another record close last night; telecommunication stocks led the line.
  • The US dollar gained following recent weakness, with the Bloomberg Dollar Spot Index, a gauge which tracks the greenback against 10 major peers, closing 0.2% higher in New York.
  • The benchmark 10yr US Treasury yield struggled to get back above 2.40%, and was largely unchanged from Tuesday close.

Canada:

  • Mexico is overtaking Canada as the second-largest exporter of goods to the US this year. Shipments from Mexico totalled $245 billion in the first 10 months this year, compared with Canada’s $230 billion, which has seen its share of US imports fall to about 13%, from 20% twenty years ago.
  • The Bank of Canada is expected to leave rates unchanged tonight, and a Fed rate hike next week is set to take interest rates in the US past Canada’s for the first time since 2007.

Europe:

  • Almost all economists surveyed by Bloomberg expect the ECB to announce tomorrow that its bond-buying program will be extended after March, and most foresee an extension of about 6 months at the current pace of 80 billion euros per month.

Australia:

  • The Australian economy contracted the most in almost 8 years last quarter, dragged down by construction and government spending. 3Q GDP fell 0.5% quarter-on-quarter on a seasonally adjusted basis, reversing a prior gain of 0.6% and worse than the consensus projection of a 0.1% drop. On year-on-year basis, GDP grew 1.8%, lower than the 2.2% expected.

Precious Metals:

  • Spot gold retreated 0.4% to $1,169.55/Oz, as holdings in bullion backed ETFs dropped for a 17th straight day, the longest stretch since March 2015.
  • According to Ned Naylor-Leyland, a London-based fund manager of the Old Mutual Gold & Silver Fund, gold will strengthen as the Fed fails to increase interest rates fast enough to keep up with inflation. He added that the central bank will be slow to tighten monetary policy because years of low rates have made the banking system dependent on loose credit and led to a misallocation of capital, which will keep real rates negative and encourage investment in gold.
  • Below the $1,170/Oz support, the next level comes in at $1,145/Oz, while the previous support of $1,200/Oz now acts as a key point of resistance.
  • Spot silver was 0.8% lower at $16.6803/Oz earlier today. The metal continues to be consolidate within the $16/Oz and 17/Oz handles.

Oil:

  • Crude oil for January delivery extended its 1.7% overnight decline further, dropping 1.1% more earlier today to $50.35/bbl.
  • Weekly industry data showed US crude stockpiles declined by 2.2 million barrels last week.
  • Crude oil remains likely to hold above the $49/bbl handle.
  • Focus has now shifted to this Saturday’s talks in Vienna, where 14 producers including Mexico and Kazakhstan have been invited to.

 

USDSGD:

  • Spot 1.4219
  • USDSGD advanced 0.2% to 1.4229, as the currency pair continues to be strongly supported at the 1.4200 level.
  • On the upside, the next point of resistance comes in at 1.4444, the currency pair’s year-to-date high.

 

AUDUSD:

  • Spot 0.7426
  • The Aussie weakened against all its major counterparts after a report showed the economy contracted in 3Q; AUDUSD slid 0.3% to 0.7417, reversing an earlier gain of as much as 0.4%.
  • Support levels below come in at 0.7259 and 0.7145, while the key resistance point lies at the 0.7500 handle.

 

USDCAD:

  • Spot 1.3292
  • USDCAD rebounded from its lowest in more than a month, to gain 0.3% to a session high of 1.3311, as renewed US dollar strength and a pullback in crude oil prices drove the currency pair higher.
  • The pair could find some support lower at the 200-day moving average of 1.3082.

 

USDCNH:

  • Spot 6.9051
  • The PBOC lowered its fixing by the most in almost a month, 0.34% weaker to 6.8808 per US dollar.
  • USDCNH rose 0.4% to 6.9073, reversing sharply from a 3-week low.

 

USDJPY:

  • Spot 114.09
  • USDJPY continues to consolidate between the 115.00 and 113.00 levels, as market participants of the currency pair continue to remain wary of the next week’s FOMC meeting.
  • The currency pair continues to struggle to stay above 114.50, its current resistance level. A close above 114.50 may result in the pair moving higher to its next resistance of 116.00.
  • Support is likely to be found at the 111.00 handle.

 

GBPUSD:

  • Spot 1.2668
  • GBPUSD declined 0.8% to 1.2650, retreating from a two-month high.
  • On a longer-term basis, the 1.2300 handle remains a key support level, while 1.2800 acts as an important resistance handle.
© Jachin Capital Pte Ltd

UEN: 201419754M


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