Daily Observations:

Most Asian equities rose, taking the lead from US equities which soared to record highs overnight. The US dollar fell against most major peers following comments this morning from the Fed’s Cleveland President Mester, while gold and the yen pared previous sessions’ declines. Oil extended gains above $54/bbl.


  • The Trump administration outlined a sweeping crackdown on undocumented immigrants Tuesday, proclaiming that it would seek to swiftly deport many more people without court hearings and target migrants charged with crimes or thought to be dangerous, not just convicts.
  • February’s Markit US manufacturing PMI fell to 54.3, from 55.0 last month, missing the consensus estimate of a rise to 55.4. Services PMI declined unexpectedly as well, falling to 53.9 from 55.6 prior, worse than the expected rise to 55.8.
  • The Fed’s Cleveland President Loretta Mester said policy makers don’t want to surprise the market on interest rates and have to be “nimble” to adjust their outlook amid global and domestic risks, underscoring the fact that the Fed is more market dependent than data dependent.
  • The US dollar rallied earlier in the session driven by a positive risk environment but pared some of its gains following the poorer-than-expected PMI numbers. The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, was 0.1% lower earlier today.
  • The benchmark 10yr Treasury yield gained 1bp to 2.44% earlier today, after rising to as high as 2.46% last night after the Fed’s Philadelphia President Harker was cited as saying a rate move next month is not “off the table at this point”.
  • US stocks rallied, following an extended weekend as higher oil prices boosted energy companies and retail stocks posted better-than-expected earnings. The S&P 500 Index climbed 0.6% to a new record high, posting its ninth gain in the past 10 sessions.
  • The Fed is due to release minutes of its most recent meeting later today, possibly giving investors a look into how members see Trump’s policies. Analysts are expecting the minutes to show greater confidence in the inflation outlook and a debate over options for winding down the US central bank’s massive bond portfolio, spurring speculation over the timing of the next interest-rate increase.


  • Manufacturing PMI this month rose to its highest level in years – a reading of 57.0, from 56.4 last month, better than the 56.0 expected.
  • Services PMI advanced to 54.4 from 53.4, surpassing the 53.6 forecasted.


  • BoE Governor Mark Carney is about to start his second strategic overhaul of the central bank and intends to roll out a new 3-year plan within months with a focus on workflow, communication and collaboration. His previous program in being scrutinized by the UK’s independent public-spending watchdog.
  • The draft Brexit law has passed its House of Lords’ second reading without vote and the bill now goes for consideration to its ‘committee stage on Feb. 27; this implies that UK Prime Minister Theresa May could trigger Article 50 by Mar. 31.


  • February’s manufacturing PMI rose to 53.5, from 52.7 in January.


  • The wage price index in 4Q last year rose 0.5% quarter-on-quarter and 1.9% year-on-year, matching estimates. Australia wage growth has come in at a record low in recent quarters as the economy adjusts to a post-mining boom environment.


  • For FY2017, Singapore expects a smaller budget surplus of S$1.9billion, or 0.4% of GDP, down from a surplus of S$5.2 billion or 1.3% of GDP, in the last budget. Some key takeaways highlighted by Finance Minister Heng Swee Keat include:
    • Singapore sees spending on healthcare and infrastructure rising rapidly; annual healthcare spending more than doubled to S$10 billion in FY2016 over the last 5 years, while public transport infrastructure is expected to cost the government more than S$20 billion over the next 5 years
    • Singapore will enhance the corporate income-tax rebate
    • The city-state will set aside S$2.4 billion over the next 4 years to implement strategies from the government-appointed Committee on the Future Economy
    • More than S$80 million will be spent on programs to strengthen capabilities in data and cyber-security
    • Foreign worker levy increases for marine & processes firms will be deferred for one more year to aid employers in these sectors
    • The nation will implement a carbon tax from 2019, and a will also introduce a vehicular emissions scheme; it’ll also raise water prices by 30% in 2 phases
    • Minister Heng stressed the importance of prudence in spending, and Singapore will adjust down by 2% the budget caps of all ministries
  • In an interview with Bloomberg Television, National Development Minister and Second Finance Minister Lawrence Wong said property curbs have helped achieve a “soft landing” for the housing market. He also added that such curbs are to “remain for some time”.


Precious Metals:

  • Spot gold erased a 0.5% decline from its previous session and was 0.8% higher at $1,238.95/Oz last night.
  • The precious metal looks to continue its sideways movement over the near term, between the $1,220/Oz and $1,250/Oz range.
  • Russ Koesterich, who helps manage the $41 billion BlackRock Global Allocation Fund, earlier this week recommended gold as insurance as he feels markets are under-pricing global political risks, which include looming elections in Europe, political uncertainty in the US and the potential impact of Brexit on the EU.
  • Silver for immediate delivery mirrored gold’s movements, erasing its previous day’s decline and advancing by as much as 1.1% to $18.0900/Oz overnight.


  • Crude oil futures expiring in April close 1.0% higher in New York, and added a further 0.4% to $54.56/bbl earlier today after OPEC’s top official said the group intends to achieve full compliance with a deal to trim production.
  • US stockpiles is forecasted to have risen by 3.5 million barrels last week, according to analysts surveyed by Bloomberg before a government report tomorrow.



  • Spot 1.4184
  • USDSGD continues to consolidate around the 1.4200 handle, erasing previous session’s gains and declining 0.3% to 1.4180 earlier today.
  • The currency pair’s downtrend since the turn of the year remains intact although a breakout above the 1.4325 resistance could signal a reversal.
  • To the downside, the 1.4000 remains the support level to watch.



  • Spot 0.7693
  • AUDUSD advanced 0.5% to 0.7698 earlier today and looks set to test the 0.7700 handle again.
  • The next important resistance lies above at 0.7835 – the currency pair’s high last year. To the downside, the 0.7500 support will be key.



  • Spot 1.3121
  • USDCAD failed to hold above its 200-day moving average of 1.3150, declining back below it to fall 0.3% to 1.3110 earlier this morning.
  • However, a key descending trend line since end-December has been broken out from and the currency pair would have to close above the 200-day moving average for a signal confirmation.
  • To the upside, 1.3200 remains as an important resistance level, while support-wise, 1.3000 is the level all eyes are on.



  • Spot 6.8646
  • The PBOC weakened its daily reference rate for a third straight day, by 0.06% to 6.8830 to the dollar.
  • USDCNH fell 0.2% to 6.8576 amid a weaker US dollar this morning. 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.



  • Spot 113.40
  • USDJPY fell 0.3% to 113.33 earlier, following the Fed’s Mester’s rather-dovish comments this morning.
  • A breakout of the 115.50 resistance level may result in a move higher to 118.66 – the 1-year high for USDJPY. To the downside, support is expected at the 100-day moving average of 111.50.



  • Spot 1.2501
  • GBPUSD reversed previous day’s declines, rising 0.8% to 1.2508 today.
  • The key resistance at 1.2800 needs to be broken convincingly to signal a reversal in the currency pair’s post-Brexit downtrend. To the downside, the 1.2400 support remains crucial.
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UEN: 201419754M

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