Daily Observations:

Asian stocks rallied while the yen, government bonds and the gold slumped after US President Trump promised to overhaul corporate taxes in the next few weeks. The US dollar rallied, and looks set to head for its first weekly gain of the year.


  • US President Donald Trump said a “phenomenal” plan to overhaul business taxes may be released within the next “two or three weeks”, but failed to offer further details. White House Press Secretary Sean Spicer said specifics would emerge only in the coming weeks, and added that the administration is at work on an outline of the most comprehensive and individual tax overhaul since 1986.
  • The Fed’s St. Louis President James Bullard said the central bank ought not to rush raising interest rates next month because uncertainty over the fiscal policies of the Trump administration is clouding the US economic outlook.
  • Last week’s initial jobless claims fell to 234,000, from 246,000 in the prior week, less than the 249,000 expected.
  • US equities rose to record highs, with the S&P 500 Index surging past the 2,300 handle to close 0.6% higher at an all-time high of 2,307.87. Energy and financial stocks led all gainers.
  • Treasuries slumped, as the benchmark 10yr Treasury yield rebounded 5bps to 2.39% in New York and added a further 3bps to 2.42% this morning.
  • The US dollar rallied following Trump’s comments that he will give a big tax relief to corporates, with the Bloomberg Dollar Spot Index gaining 0.3%.
  • A federal appeals court has ruled unanimously that the US will remain open to refugees and visa holders from 7 Muslim-majority countries, rejecting a bid by the Trump administration to reinstate a travel ban in the name of national security. Trump’s administration is widely expected to ask the Supreme Court to step into the case, with the President tweeting “SEE YOU IN COURT” within minutes of the ruling.


  • Prime Minister Justin Trudeau will visit the White House next Monday to meet with US President Trump for the first time, a visit that is expected to be a far cry from the warm state dinner thrown by Barack Obama for Trudeau a year ago.


  • BoE Deputy Governor Kristin Forbes, the most hawkish of her colleagues, is set to leave the committee in June and will be replaced by Charlotte Hogg. With Forbes currently the most vocally hawkish of the MPC members, her departure could shift the policy centre of the committee.


  • On a year-on-year basis, exports last month rose 15.9% in yuan terms, and 7.9% in dollar terms, trumping the expected numbers of 5.2% and 3.2% respectively.
  • Imports gained 25.2% in yuan terms and 16.7% in dollar terms over the same period, better than the median estimates of 15.2% and 10.0% respectively.
  • China’s trade surplus in January rose to $51.35 billion, up from $40.71 billion previously.


  • US President Donald Trump’s accusations of currency manipulation against Japan aren’t a priority for him in talks with Japan Prime Minister Shinzo Abe planned for later today, a US administration official said.
  • PPI in January was higher than expected, rising 0.6% from a month earlier and 0.5% from a year earlier, beating the consensus estimates of 0.2% and 0.0% respectively.


  • In its quarterly update of forecasts released today, the RBA left inflation estimates broadly unchanged, while growth in the year to June 2017 was cut by 1 percentage point due to a “base effect” from a contraction in 3Q. It however expects GDP growth to increase to 2.5-3.5% in late 2017 and to be above potential for most of the forecasted period. The RBA also warned that higher commodity price levels are unlikely to be sustained.

Precious Metals:

  • Spot gold erased its gains from the past 3 days, slumping 1.6% to $1,222.20/Oz, as investors spurned safe haven assets in favour of riskier ones following Trump’s promise of an overhaul of corporate taxes.
  • The precious metal could undergo some consolidation between the range of $1,220/Oz and $1,250/Oz over the near term.
  • Silver for immediate delivery mirrored gold’s decline as well, falling 1.2% to $17.5600. The $18/Oz handle is expected to be a key level of resistance, while support may be found around $17.2500/Oz.


  • Crude oil futures expiring in March extended Wednesday’s rebound, gaining 1.3% to $53.00/bbl overnight.
  • The global markets will shift into deficit during the first half of this year and US crude stockpiles will shrink amid a decline in imports as the OPEC-led curbs take effect, Goldman Sachs said this week.
  •  Reports from the IEA and OPEC are due later today and Monday respectively, offering their first updates on the progress of the cuts.



  • Spot 1.4212
  • USDSGD gained 0.6% to 1.4228, its highest level so far this month, following overnight US dollar strength.
  • The downtrend since the turn of the year remains intact, but a breakout above the 1.4325 resistance could signal a potential reversal.
  • To the downside, the 1.4000 remains the support level to watch.



  • Spot 0.7654
  • AUDUSD erased an overnight decline earlier on the back of better-than-expected Chinese trade data, and was largely unchanged earlier today.
  • The 0.7600 continues to act as support. A clean break below could result in a downward move for the currency pair back towards 0.7500.



  • Spot 1.3122
  • USDCAD rebounded off the 1.3100 handle last night, following 2 straight days of declines, and is currently relatively unchanged from yesterday’s close of 1.3125.
  • The 1.3000 continues to be key, and 2 consecutive daily closes below it should indicate further downside momentum, with the next support below coming in at 1.2800.



  • Spot 6.8645
  • The PBOC weakened its daily reference rate to 6.8819 to the dollar, from 6.87109 yesterday.
  • USDCNH rose 0.3% to 6.8686, and looks set to gain for the fifth consecutive session.
  • The 6.8000 remains as a significant support level.



  • Spot 113.66
  • USDJPY rebounded sharply above the 112 handle, rising 1.4% to 113.80, as an overnight risk-on sentiment saw investors spurn safe haven assets for riskier ones.
  • Some consolidation is expected between the range of 112 – 115.50.



  • Spot 1.2506
  • GBPUSD erased its previous day’s gains, falling 0.6% back towards the 1.2500 handle, on the back of a stronger USD and news of the departure of BoE hawk Kristin Forbes.
  • The key resistance at 1.2800 needs to be broken convincingly to signal a possible reversal in trend. To the downside, the 1.2400 support remains crucial.
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