February 20, 2017

Daily Observations:

Most Asian stocks rose, taking lead from a strong close by US indices last Friday. The US dollar maintained gains earlier today, while gold edged lower following Friday’s reversal.

US:

  • President Donald Trump would have the support of Congress if he declared China a currency manipulator, as he pledged during his election campaign, according to 2 members of the Senate Foreign Relations Committee.
  • The US Conference Board’s leading economic index rose 0.6% in December from a month earlier, registering its strongest gain in 19 months.
  • The Fed’s Cleveland President Loretta Mester said she doesn’t think the central bank is “behind the curve” on interest rates. She also added that monetary policy can’t do much more to help the US labor market.
  • The S&P 500 Index recovered from session lows on Friday to close 0.2% higher at a fresh record high with telecommunication shares leading all sectors. The Dow Jones Industrial Average and Nasdaq Composite both ended higher as well.
  • The US dollar strengthened, with the Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, advancing 0.3% in New York last Friday and a further 0.1% in Asia this morning.
  • Treasuries gained, pushing the benchmark 10yr yield lower by 4bps to 2.41%, amid renewed political concerns in Europe.
  • The Fed is due to release its minutes from its most recent meeting later this week, possibly giving investors a look into how members see Trump’s policies.
  • US bond and stock markets will remain shut today for Presidents’ Day.

Europe:

  • Chances of a left-wing single candidacy in the French presidential election faded over the weekend as the main contenders seem unable to bridge their differences, while independent candidate Emmanuel Macron got entangled in controversies over France’s colonial past, leaving the race wide open 9 weeks ahead of the vote.
  • Germany’s center-left Social Democrats (SPD) have moved ahead of Chancellor Angela Markel’s conservative Christian Democrats in an opinion poll by the Emnid Institute for the first time since 2006, Bild am Sonntag newspaper reported.

China:

  • Chinese bans had more than 26 trillion yuan, or $3.8 trillion, of wealth management products held off their balance sheets at the end of last December, a 30% increase from a year earlier, according to the PBOC.
  • The PBOC is including off-balance sheet products in its macro-prudential assessment framework starting this quarter to better gauge the expansion of credit and risks in the financial system. The move may lead to banks reporting higher credit growth and may require them to take steps to maintain sufficient capital reserves to limit risks posed by the investment products.

Japan:

  • Exports last month rose 1.3% from a year earlier, slowing from the prior gain of 5.4% and missing the 5.0% rise predicted by analysts. In contrast, imports over the same period rose 8.5%, reversing a prior 2.6% drop and surpassing the median consensus of 4.8%.

Singapore:

  • 4Q GDP rose 2.9% year-on-year and 12.3% quarter-on-quarter on a seasonally adjusted annualized basis; analysts had forecasted gains of 2.5% and 12.6% respectively.
  • Non-oil domestic exports rose 8.6% from a year earlier, less than the 9.6% gain expected.
  • Finance Minister Heng Swee Keat will present the nation’s 2017 budget later today and analysts surveyed by Bloomberg are expecting the government to deliver a modest fiscal push just as China’s economy is showing consistent signs of recovery and thus spurring exports across the region. Consumer demand remains weak though, and with global uncertainties mounting, the fiscal policy focus is set to stay on targeted measures and plans to spur productivity.

Precious Metals:

  • Spot gold reversed early session gains to end 0.2% lower at $1,234.34/Oz in New York on Friday; the precious metal was largely unchanged this morning.
  • The precious metal looks to continue its sideways movement over the near term, between the $1,220/Oz and $1,250/Oz range.
  • Silver for immediate delivery retreated 0.4% to $17.9251/Oz earlier today, despite rising above the $18/Oz resistance last week.

Oil:

  • Crude oil futures expiring in March rose 0.1% to $53.40.bbl on Friday and was largely unchanged earlier today, after spending last week in its tightest trading range in 13 years.
  • Crude oil price has held above $50/bbl since OPEC and 11 other nations started trimming supply at the start of this year in order to address a global supply glut.
  • A break out from the $50/bbl – $55/bbl range is necessary for a clearer direction.

 

USDSGD:

  • Spot 1.4179
  • USDSGD retreated slightly by 0.1% to 1.4171, as investors await the unveiling of the 2017 budget later today.
  • The currency pair’s downtrend since the turn of the year continues to remain in play; a breakout above the 1.4325 resistance could signal a potential reversal.
  • To the downside, the 1.4000 remains the support level to watch.

 

AUDUSD:

  • Spot 0.7672
  • AUDUSD ended 0.4% lower last Friday but pared some loses earlier today after rising by as much as 0.2% to 0.7680.
  • The next resistance lies above at 0.7835 – the currency pair’s high last year. To the downside, the 0.7500 support will be key.

 

USDCAD:

  • Spot 1.3090
  • USDCAD retreated below the 1.3100 handle earlier today, falling 0.1% to 1.3084. The Canadian dollar had weakened 0.4% on Friday against the dollar to close just below 1.3100.
  • The 1.3000 continues to be key, and 2 consecutive daily closes below it may indicate further downside momentum, with the next support below coming in at 1.2800. To the upside, a breach of the 1.3200 resistance could signal a move higher to the next level of 1.3400.

 

USDCNH:

  • Spot 6.842
  • The PBOC weakened its daily reference rate by 0.42% to 6.8743 to the dollar, the most since Jan. 9.
  • USDCNH retreated 0.1% o 6.8421 earlier. The currency pair has been locked within the range of 6.8000 to 6.9000 for most of this year.
  • The 6.8000 remains as a significant support level.

 

USDJPY:

  • Spot 113.13
  • USDJPY recovered 0.3% to 113.19, paring some of Friday’s 0.7% decline to 112.84.
  • The currency pair has struggled to break above the 115 handle over the past month. A breakout of the 115.50 resistance level may result in a move higher to 118.66 – the 1-year high for USDJPY.

 

GBPUSD:

  • Spot 1.2416
  • GBPUSD was relatively unchanged earlier today following a 0.8% decline to 1.2412 on Friday.
  • The key resistance at 1.2800 needs to be broken convincingly to signal a possible reversal in the currency pair’s current downtrend. To the downside, the 1.2400 support remains crucial.
© Jachin Capital Pte Ltd

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