Asian stocks slid earlier today as falling metal prices pulled down shares of raw-materials companies. The US dollar maintained near its lows following overnight weakness on Treasury Secretary Mnuchin’s comments. Gold headed for a fourth weekly increase while oil looks poised for its best week of the year.
- US Treasury Secretary Steven Mnuchin signalled no urgency to designate China a currency manipulator, saying he wants to use a regular review of FX markets to determine if the US’s largest trading partner is cheating.
- No announcement on currency manipulation will come before the Treasury’s April report, Mnuchin said in an interview with Bloomberg yesterday. The decision contradicts an October pledge by Trump to direct his Treasury secretary to name China a manipulator on the first day of his administration.
- Mnuchin also said the impact of fiscal stimulus this year on the economy may be limited.
- The US dollar weakened following Mnuchin’s comments, as the Bloomberg Dollar Spot Index slumping 0.3% to its lowest in 2 weeks before steadying and paring some losses earlier this morning.
- US Treasuries gained; the benchmark 10yr yield slid 4bps to 2.37% following USD weakness.
- The S&P 500 Index eked out a slight gain as the Dow Jones Industrial Average closed at an all-time high for the tenth consecutive day, its best streak since 1987. Utility and telecommunication stocks led the way for gainers.
- In an interview with CNBC, Treasury Secretary Mnuchin said issuing ultra-long Treasury bonds is something “we should seriously look at”, adding that while he instructed staff to begin researching the option, he wasn’t quite ready to announce anything concrete.
- President Donald Trump summoned some of America’s most prominent corporate executives to the White House Thursday and told them he intends to put them to work restoring manufacturing jobs and US dominance in trade.
- 4Q GDP last year rose 0.4% quarter-on-quarter and 1.7% annualized, matching expectations. Exports experienced a sizeable uptick, rising 1.8% from the previous quarter and beating the 1.4% gain predicted. Imports rose 3.1% over the same period, surpassing the consensus estimate of 1.8%.
- RBA Governor Philip Lowe said he expects a “period of stability” in interest rates and suggested further cuts could push already high household debt to “dangerous” levels.
- Lowe further added that current market pricing which is for interest rates to be constant throughout the year seems “a reasonable proposition” to him, and that it would be god if people focus on other things rather than quarter percent movements in rates.
- Headline inflation in January rose 0.6% year-on-year, matching expectations. Core CPI, which excludes the effects of food and energy prices, gained 1.5% from a year earlier, beating the median estimate of 1.4%.
- Spot gold climbed 1.1% to $1,251.22/Oz, its highest in 3 months, following overnight US dollar weakness.
- A key test will be if gold will be able to break convincingly above the 1,250/Oz resistance level. The 200-day moving average above at $1,263/Oz represents the next target level to the upside.
- Silver for immediate delivery mirrored gold’s advance, and gained 1.3% to $18.2382/Oz earlier in the sessions.
- Crude oil futures expiring in April advanced 1.6% to $54.45/bbl in New York after the US Energy Information Administration reported crude supplies climbed 564,000 barrels last week.
- While total inventories are at the highest in weekly data going back to 1982, the increase trailed a 3.25 million-barrel gain predicted by analysts and is the smallest build this year.
- Spot 1.4082
- USDSGD declined 0.7% to as low as 1.4051 last night before paring some of its losses earlier today.
- The currency pair has broken below its 100-day moving average and is currently supported at the 1.4050 level.
- Spot 0.7704
- AUDUSD climbed to a 3-month high last night, rising 0.7% to 0.7741 before erasing most of its gains back towards the 0.7700 handle earlier this morning.
- The currency pair is showing signs of exhaustion following its move from below 0.7200 in end-December; a retracement back to the 0.7500 support is possible over the medium-term.
- Spot 1.3110
- USDCAD retreated 0.6% to 1.3083 overnight amid fresh US dollar weakness.
- To the upside, 1.3200 remains as an important resistance level, while support-wise, 1.3000 is the level all eyes are on.
- Spot 6.8540
- The PBOC strengthened its daily reference rate to 6.8655 to the dollar, from 6.8695a day earlier.
- USDCNH declined below its 100-day moving average, sliding 0.3% to 6.8446 last night. 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 112.78
- USDJPY retreated to a 2-week low, falling 0.5% overnight to 112.55 following Mnuchin’s comments.
- The currency pair continues to trade sideways within the 112 to 115 range.
- Spot 1.2549
- Buoyed by a weaker US dollar, GBPUSD rose by as much as 0.9% to 1.2561.
- With the 100-day moving average holding firm, the momentum has gradually shifted to the upside.
- 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 continues to remain crucial.