Asian equities were broadly higher today, cheered by Wall Street’s rise on Friday and after President Trump moved to scale back regulations on the financial industry last week. The US dollar continued to weaken following slower-than-expected wage growth last Friday. Gold maintained near its 2-month high.
- January’s non-farm payroll rose by 227,000, more than the expected 180,000 and December’s upwardly-revised 157,000 gains. The unemployment rate ticked higher to 4.8%, more than the 4.7% predicted.
- The average hourly earnings last month gained less than expected – 0.1% month-on-month and 2.5% year-on-year, less than the forecasted 0.3% and 2.7% respectively. Prior month’s figures were revised lower as well.
- Factory orders in December gained 1.3%, reversing a drop in November; a rise of 0.5% was expected. Durable goods orders slipped 0.5%, more than 0.4% drop predicted amongst analysts.
- January’s ISM non-manufacturing composite fell to 56.5, from 56.6 in December, less than the 57.0 forecasted.
- President Donald Trump has slammed the federal judge who temporarily ended US immigration restrictions made in his executive order a week ago, vowing that the decision in a case involving Washington and Minnesota will be reversed.
- San Francisco Fed President John Williams reiterated on Friday that three rate hikes this year is a reasonable guess. His comments reversed losses in the dollar sparked when the latest jobs report showed weak wage growth even as hiring picked up.
- Chicago Fed chief Charles Evans said the central bank should raise rates slowly even as Trump’s fiscal policies are expected to help push economic growth beyond sustainable levels.
- The US dollar continues to edge lower, with the Bloomberg Dollar Spot Index, which tracks the US dollar against 10 other major peers, slipping 0.1% earlier today after ending 0.1% lower last Friday in New York. The gauge has fallen for 6 straight weeks, the longest slump since August 2010.
- US Treasuries initially strengthened last Friday after weak wage growth was reported but reversed on John Williams’ comment about the possibility of a rate hike in March. The benchmark 10yr Treasury yield was lower this morning, falling 1bp to 2.45%.
- US equities ended Friday near session highs, with the Dow Jones Industrial Average reclaiming a close above 20,000 and the NASDAQ ending at a record high. The S&P 500 Index climbed 0.7% to within a point of its all-time closing record. Lenders surged 2% as Trump signalled his intention to revamp the Dodd-Frank Regulatory regime.
- President Donald Trump said the process for coming up with a replacement for the Affordable Care Act could stretch into 2018, a longer time frame than he previously indicated. He added he would put forward his plans for replacing the law once Tom Price, his pick to run the Department of Health & Human Services, is confirmed.
- Problems facing the British labour market including skills shortages and an aging population are likely to be exacerbated by Brexit, according to a Mercer report. These gaps will no longer be filled by foreign workers, which are set to decrease in number as the UK negotiates a new relationship with the EU.
- The UK faces slow growth or even contraction of its working population as net migration roughly halves from current levels to 185,000 per year from 2020 onwards, the consultancy firm said in a report.
- January’s Caixin China PMI Composite fell to 52.2 from 53.5, while the PMI Services gauge fell to 53.1 from 53.4 in December.
- December retail sales slid 0.1% month-on-month, poorer than the 0.3% rise projected. November’s 0.2% gain was revised lower to 0.1%.
- The Melbourne Institute Inflation gauge rose 0.6% from a month earlier and 2.1% from a year before.
- RBA Governor Phillip Lowe and his board convene tomorrow for their first policy meeting of the year, and analysts and economists are expecting no change to its benchmark 1.5% cash rate.
- Spot gold advanced 0.4% earlier today to $1,225.23/Oz. The next resistance comes in at $1,230/Oz, a level last tested in November last year. Beyond that, the $1,250/Oz level will be key.
- Gold has been buoyed by Friday’s jobs report which showed US wage growth slowed more than projected, easing concern that rising inflation will spur the Fed to move more aggressively in raising interest rates.
- Silver for immediate delivery gained 0.8% to $17.6438/Oz, paring some of Friday’s losses. The $18/Oz level is expected to be a key level of resistance.
- Crude oil futures expiring in March edged higher by 0.2% earlier today to $53.95/bbl, extending upon Friday’s gains even as US rigs rose to the most since October 2015. US drillers increased the rig count by 17 to 583, according to data from Baker Hughes Inc. last Friday.
- Spot 1.4077
- Helped on by a weaker US dollar, USDSGD declined to a 2.5-month low of 1.4054 this morning.
- With the 1.4150 level soundly broken, the next support comes in at the psychological 1.4000.
- Spot 0.7665
- AUDUSD declined 0.3% to 0.7659, reversing Friday’s gain, following weaker-than-expected retail sales.
- 0.7600 could provide some momentary support. AUDUSD has risen more than 6% since the turn of the year.
- Spot 1.3020
- USDCAD remained little changed from Friday’s close of 1.3023. The currency pair is threatening to break below its 1.3000 support. Beyond that, the next support comes in at 1.2800.
- The loonie has gained about 4% against the US dollar since touching a 10-month low at the end of last year amid higher oil prices and a weaker USD. But looming are possible US trade talks, a weak economic recovery and a potentially dovish Bank of Canada. These fundamental factors, along with technical indicators, represent the risk of a potential reverse.
- Spot 6.8047
- The PBOC weakened its yuan daily reference rate by 0.07% to 6.8606 to the US dollar, its weakest fixing level since Jan. 20.
- USDCNH was little changed earlier today, holding above the 6.8000 support.
- Spot 112.48
- USDJPY fell by as much as 0.3% to 112.23 earlier today, before paring back some of its declines.
- The currency pair is strongly supported at the 112 handle. A break below would provide impetus for the currency pair to move lower to 110 – the 50% retracement level since Nov. 9.
- Spot 1.2485
- GBPUSD was mostly unchanged earlier today at 1.2485, following Friday’s 1.3% decline after lawmakers voted to give Prime Minister May the power to trigger Article 50, the exit clause in the EU’s set of laws.
- The currency pair has stalled over the past week following its recent advance, and seems to be undergoing some consolidation between 1.2400 and 1.2650.