Daily Observations:

Stocks in Asia fell while the yen strengthened at the start of a week in which US President Trump will stand before Congress and Fed Chair Yellen will also speak. Oil was steady following Friday’s decline, while safe haven assets like gold and the yen maintained gains.

US:

  • Treasury Secretary Steven Mnuchin said President Donald Trump’s upcoming budget won’t touch entitlement programs such as Social Security or Medicare, and will instead focus on ways to produce long-term economic growth by slashing taxes. Mnuchin added that tax cuts and regulatory relief will lead to a sharp increase in economic growth of 3% or higher.
  • At least 4 of Wall Street’s biggest banks are breaking away from the consensus view, telling clients that the Fed will probably raise rates before June. BNP Paribas, JPMorgan Chase and Mizuho Securities predict a hike at May’s meeting, while Jefferies Group is alone among Fed primary dealers in calling for an increase next month.
  • According to Fed funds futures pricing data on Bloomberg, the probability of a March hike is about 40%.
  • US Treasuries gained broadly in New York on Friday, as the benchmark 10yr yield closed 6bps lower at 2.31%, ahead of Trump’s address to Congress this week.
  • The USD dollar on Friday pared some of its previous day’s losses, as the Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, gaining 0.1%.
  • Equities rallied in the last half-hour of trading last Friday to recover losses from earlier in the session; the S&P 500 Index edged up marginally by 0.2%, as utility shares’ gains offset declines by energy stocks.
  • Investors will be looking for details on tax cuts and other economic plans when Trump addresses Congress this week.

Canada:

  • January headline inflation surged 2.1% from a year earlier on the back of rising gasoline prices and new carbon levies, bringing inflation to the highest in more than 2 years; analysts had predicted a 1.6% rise.

UK:

  • Britain is set to unveil plans for overhauling migrant-worker rules after Brexit in a report later this year, Home Secretary Amber Rudd said, promising to act on public fears over immigration.
  • The Times of London reported that Prime Minister Theresa May’s team is preparing for Scotland to potentially call an independence referendum in March to coincide with triggering of Article 50.

France:

  • Emmanuel Macron won his third endorsement in less than a week, giving the independent renewed momentum in polls that suggested he was again the favourite to become France’s next president as Republican Francois Fillon faced the prospect of an extended judicial investigation. Christophe Caresche, a Socialist lawmaker, said he will abandon his party’s nominee to back Macron.
  • Macron would get 25% support if the first round of voting were held now, compared with 27% for Le Pen and 19% for Fillon, an Odoxa Dentsu poll over the weekend showed.

Australia:

  • Anti-immigrant populists and the opposition Labor Party advanced in opinion polls as PM Malcolm Turnbull’s government descended into infighting. Turbull is being undermined by his hard-line conservative predecessor Tony Abott, who last week conducted a media blitz calling on Turnbull to slash immigration, scrap a renewable energy target to lower electricity prices, abolish the Human Rights Commission, reform the upper house of parliament and cut government spending.
  • 1-in-10 people surveyed by Newspoll backed Pauline Hanson’s One Nation party, more than double its support base last year, amid her attacks on Muslim immigration, free trade and foreign investment in Australia.

Singapore:

  • Industrial production last month rose 2.2% year-on-year, falling well below the revised 22.1% gain in December and the 9.5% rise predicted by analysts.
  • The slower-than-expected pace was attributed sharp declines in the struggling oil-depend marine and offshore engineering industry and the volatile pharmaceuticals sector.

Precious Metals:

  • Spot gold gained 1.6% to $1,257.19/Oz, its highest in 3 months, on a weaker US dollar and rising political uncertainty in Europe.
  • Having broken the previous resistance of $1,250/Oz, the test comes in the form of the 200-day moving average at $1,263/Oz.
  • Silver for immediate delivery rallied 2.1% to $18.3703/Oz, mirroring gold’s advance and rising to a new 3-month high.

Oil:

  • Crude oil futures expiring in April declined 0.8% to $53.99/bbl last Friday and was largely unchanged during Asia trade this morning, after Baker Hughes Inc. data showed US explorers raised the rig count by 5 to 602 last week.

 

USDSGD:

  • Spot 1.4050
  • USDSGD maintained losses earlier following Friday’s 0.7% decline to 1.4050.
  • The currency pair has broken below its 100-day moving average and is currently supported just above the 1.4000 psychological level.

 

AUDUSD:

  • Spot 0.7690
  • AUDUSD climbed 0.2% to 0.7691 earlier, erasing last Friday’s decline.
  • The pair continues to fluctuate below the key 0.7700 resistance handle, although it is beginning to show signs of exhaustion following its move from 0.7200 in end-December; a retracement back to the 0.7500 support is possible over the medium-term.

 

USDCAD:

  • Spot 1.3101
  • USDCAD held losses following a 0.5% decline on Friday, rising 0.1% earlier today to the 1.3100 handle.
  • To the upside, 1.3200 remains as an important resistance level, while support-wise, 1.3000 is the level all eyes are on.

 

USDCNH:

  • Spot 6.8612
  • The PBOC weakened its daily reference rate by 0.23% to 6.8814 to the dollar, from 6.8655 last Friday.
  • USDCNH recovered from its previous session’s lows, and gained 0.1% to 6.8610 earlier.
  • The currency pair has been largely in consolidation phase for most part of the year so far, with movements constrained within the range of 6.8000 to 6.9000.
  • The 6.8000 remains as a significant support level.

 

USDJPY:

  • Spot 112.18
  • USDJPY neared its year-to-date lows, holding onto losses following Friday’s 1.0% fall to 112.12.
  • A retreat below the 111.60 support could bring the currency pair another leg lower to 110.

 

GBPUSD:

  • Spot 1.2423
  • GBPUSD declined 0.5% earlier today to 1.2400, after a report said PM May’s team was preparing for Scotland to potentially call for an independence referendum in March.
  • A break below the February-low of 1.2350 could drive the currency pair lower to around 1.2100 – 1.2200.
© Jachin Capital Pte Ltd

UEN: 201419754M


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