January 23, 2017

Daily Observations:

The US dollar slumped after Donald Trump in his first days in office offered little news on his plans to boost growth while reigniting concerns over protectionism. Equities in Asia remain mixed, although most pared earlier sessions’ gains. Safe haven assets such as gold and the yen advanced.

US:

  • In Donald Trump’s inauguration speech on Friday, America’s 45th President said he would place American interests at the forefront of his agenda, in line with the protectionist policies he said he would implement during his campaign trail, but offered hardly any further details regarding future policies.
  • Investors pulled back from post-election trades, adding to the impressions that the rally sparked by Trump’s proposals for pro-growth equities may be coming to an end.
  • The S&P 500 Index advanced 0.3% last Friday, logging a 0.2% weekly loss. The index is virtually unchanged since the day before the Fed raised interest rates.
  • The US dollar extended upon Friday’s sell-down, with the Bloomberg Dollar Spot Index retreating 0.5% this morning. The Dollar Index was 0.4% weaker at 100.33, close to its 1-month low.
  • The benchmark 10yr Treasury yield fell by 5bps to 2.42% earlier today, due to increased investor-demand for safe haven assets such as Treasuries.

Canada:

  • CPI in December slipped 0.2% from a month earlier, weaker than the 0.0% expected albeit decelerating at a slower pace than November’s 0.4% fall. On a year-to-year basis, CPI rose 1.5%, missing the consensus estimate of 1.7%.
  • Inflation hasn’t exceeded the Bank of Canada’s 2% target for about 2 years, a symptom that the economy is awash with excess capacity.
  • Retail sales in November gained 0.2% month-on-month, less than the 0.5% predicted as well as October’s upwardly-revised 1.2% gain.

UK:

  • UK Prime Minister is set to meet Donald Trump on Friday, where they will begin talks regarding a trade deal between the US and the UK that would take effect after Britain leaves the EU.

China:

  • Confronted by the challenge of a Donald Trump-led administration, China is signalling it’s ready to work with the new Republican president. The official Xinhua News Agency congratulated Trump on his inauguration and said it hoped for a “win-win” cooperation between the 2 nations. An editorial run by the state-backed newspaper China Daily took a similar tone.

Precious Metals:

  • Spot gold reached a fresh 2-month high, gaining 0.8% to $1,219.55/Oz earlier today amid increased investor-demand in safe haven assets.
  • Considering the $1,200/Oz support has held up well over the past week, renewed buying in the precious metal could drive it up to its next resistance level of $1,230/Oz.
  • Silver for immediate delivery advanced 1.0% to $17.2588/Oz, mirroring gold’s gains.

Oil:

  • Crude oil futures expiring in February rose 2.1% in New York last Friday to close at $53.33/bbl after OPEC and other oil producers agreed on a way to monitor their compliance with last month’s historic supply deal, putting global markets on track to re-balance after more than 2 years of oversupply.

 

USDSGD:

  • Spot 1.4185
  • USDSGD declined back below its 1.4200 handle, sliding 0.6% to 1.4178 earlier today, amid a broader US sell-off after Trump’s inauguration last Friday revealed little details regarding his economic policies.
  • The key support remains at 1.4150. A clean break below it would generate sufficient momentum for the currency pair to reach the psychological 1.4000 level.

 

AUDUSD:

  • Spot 0.7576
  • AUDUSD gained 0.3% to 0.7579, and looks set to extend upon its recent rally. The currency pair has risen 13 out of the past 14 sessions.
  • The key price to monitor continues to be 0.7500. Should the currency pair maintain above it, it could signal a possible move to the next resistance at 0.7650 or even 0.7750.

 

USDCAD:

  • Spot 1.3282
  • USDCAD erased Friday’s gains, slipping 0.3% to 1.3281 earlier today amid broad US dollar weakness as well as stronger crude oil prices over the weekend.

 

USDCNH:

  • Spot 6.8183
  • The PBOC strengthened its yuan fixing today, by 0.6% to 6.8428 to the US dollar.
  • USDCNH declined 0.5% to 6.8078, and looks set to test the 6.8000 handle for the fourth time this year.

 

USDJPY:

  • Spot 113.59
  • USDJPY declined 1.0% to 113.44, amid fears of global trade wars amongst investors which have led to increased demand in safe haven assets such as the yen.

 

GBPUSD:

  • Spot 1.2431
  • GBPUSD gained to a fresh 1-month high, rising 0.6% to 1.2445. A strong close above the 1.2400 level could signal more room for the currency pair to rise, with the resistance of 1.2550 the next target.
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