January 16, 2017

Daily Observations:

The pound tumbled on a report PM May will press for a “hard” Brexit, spurring demand for safe haven assets such as gold and the Japanese yen. Equities in Asia broadly tumbled.

US:

  • Retail sales in December gained 0.6% month-on-month, accelerating from November’s upwardly-revised 0.2%, but missing the median estimate of 0.7%.
  • PPI in December rose 0.3% from a month earlier and 1.6% from a year earlier, both in line with analysts’ expectations.
  • A sentiment gauge by the University of Michigan this month slipped to 98.1 from 98.2, underwhelming the expected 98.5 reading.
  • The US dollar fell to a fresh low last Friday ahead of retail sales data before reversing losses after the data exceeded estimates. The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, was 0.3% higher earlier today.
  • The benchmark 10yr Treasury yield gained 4bps to 2.40% last Friday, erasing most of its losses for the week. It reached 2.31% last Thursday, its lowest level since 30 Nov.
  • US equities hovered near record highs, as the S&P 500 Index gained 0.2%, as banks led gainers, buoyed by strong earnings by JP Morgan and Bank of America. The Nasdaq Composite Index added 0.5% to register a fresh record high.
  • US markets remain shut on Martin Luther King Day today.

UK:

  • According to the Sunday Times, UK Prime Minister Theresa May will signal plans to quit the EU’s single market to regain control of Britain’s borders and laws. The report added that May will prepare to withdraw from tariff-free trade with the region in return for the ability to curb immigration and strike commercial deals with other countries, sparking a sharp decline in the pound.

China:

  • Chinese shares earlier today fell for the fifth day in a row, the longest run of losses since August 2015, as a measure of developers tumbled on concern policy makers will boost efforts to curb speculators. Shanghai Mayor Yang Xiong said yesterday that the city will strengthen regulation this year.

Japan:

  • November machine orders slid 5.1% from a month earlier but rose 10.4% from a year ago; the former falling more than the expected 1.7% drop, and the latter gaining more than the predicted 8.1% gain.
  • PPI in December rose 0.6% month-on-month and fell 1.2% year-on-year, outperforming the median estimates of -1.4% and 0.2% respectively.

Singapore:

  • Retail sales in November gained 0.5% month-on-month and 1.1% from a year earlier, with the former exceeding estimates of 0.2% and the latter missing the median consensus of 1.7%. Both gains were slower than prior month’s figures. Excluding the sale of automobiles, retail sales were 2.1% down from a year earlier.

Precious Metals:

  • Spot gold fell 0.7% on Friday to close out the week just below the $1,200/Oz handle, but gained back above the level earlier today, adding 0.7% to $1,205.13/Oz, amid growing safe haven demand ahead of Brexit concerns.
  • Gold prices should remain capped around present levels for the time being. $1,180/Oz represents the support level below.
  • Silver for immediate delivery traded higher earlier as well, rising 0.6% to %16.9230/Oz.

Oil:

  • Crude oil futures expiring in February fell 1.2% to $52.37.bbl, capping off its biggest weekly decline since November. Futures recovered by as much as 0.5% today after data showed rigs in the US fell for the first time in 11 weeks.

 

USDSGD:

  • Spot 1.4301
  • USDSGD added 0.2% to 1.4309, following its rebound off a 1-month low last Friday.
  • Support and resistance levels come in at 1.4150 and 1.4410 respectively.

 

AUDUSD:

  • Spot 0.7486
  • AUDUSD continues to struggle to trade above the 0.7500 resistance level, retreating back below it for the third consecutive session. The currency pair was 0.3% lower at 0.7475 earlier today.
  • With both the 100- and 200-day moving averages coinciding at 0.7500 as well, the least path of resistance will be towards the downside for the time being. A retreat back to the 0.7400 handle seems likely.

 

USDCAD:

  • Spot 1.3135
  • USDCAD extended upon Friday’s rebound, adding a further 0.2% to 1.3146 earlier.
  • The currency pair has undergone a sharp reversal following last Thursday 1.5% decline to almost a 3-month low of 1.3030.
  • Continued support above the 1.3100 200-day moving average could push the currency pair further to 1.3200.

 

USDCNH:

  • Spot 6.8657
  • The PBOC strengthened its fixing by 0.05% earlier today, to 6.8874 per US dollar. This marks the third straight day the central bank has raised its fixing, taking its 3-day advance to 0.5%.
  • USDCNH was little changed, holding just above Friday’s close of 6.8549.

 

USDJPY:

  • Spot 114.10
  • The yen strengthened against all its major peers as concerns of a hard Brexit triggered safe haven demand.
  • USDJPY fell to as low as 0.5% to 113.98 earlier today, the third consecutive session the currency pair has retreated below 114.00.

 

GBPUSD:

  • Spot 1.2021
  • GBPUSD gapped lower, and traded 1.6% down to 1.1986, its lowest level since its flash crash low on Oct 7 last year, following investors’ concerns of a hard Brexit ahead of Theresa May’s speech tomorrow.
  • With the support at 1.2090 breached, the next level below comes in at 1.1841.
© Jachin Capital Pte Ltd

UEN: 201419754M

The contents of this document are for information only and is taken or compiled from sources that we, Jachin Capital Pte Ltd, believe to be reliable. To the maximum extent permitted by law, we do not make any representation or warranty (express or implied) that this information is accurate, timely or complete and it should not be relied upon as such. Opinions expressed are our current opinions as at the date of this document only and are subject to change without notice. We endeavour to update on a reasonable basis the information discussed but regulatory, compliance or other reasons may prevent us from doing so. The publication and distribution of this document is not and does not imply any form of endorsement of any person, entity, service or product described or appearing here. This is not and does not constitute or form an offer to buy or sell nor the solicitation of an offer to buy or sell any security or financial instrument nor to participate in any particular trading or investment strategy. We are not soliciting any action based on this document. The information, services and products described or appearing here are intended only for Accredited Investors (as currently defined in the Securities and Futures Act) and are not intended for nor targeted at the public in any specific jurisdiction. This information does not take into account the particular investment objectives, financial situations or needs of individual investors. Investors should seek independent financial, tax or legal advice or make independent investigations as considered necessary or appropriate before making an investment decision. Investments involve risk. Any past performance, projection, forecast or simulation of results is not necessarily indicative of the future or likely performance of any investment instrument.

Essential SSL