The US dollar retreated against most of its peers as the first full trading day of the 2017 got going, unwinding some of the gains that have been spurred by the prospect of higher US interest rates. Asian equities were mixed, as indices in Japan, India, Singapore and Indonesia fell, while markets in China, Hong Kong and Australia rose. Crude oil and gold rose.
- US stocks completed the fourth annual gain last Friday since 2011 on the longest losing streak since the election, as the S&P 500 Index cut its advance this year to 9.3% after falling 0.5% in New York to close out 2016.
- The Dow Jones Industrial Average completed the year more than 250 points below the 20,000 level after climbing within 30 of the mark earlier last week. Trading volume was almost 30% below the 30-day average.
- Financial shares contributed the most to the S&P 500 Index’s gain, advancing 20% for the year, while energy health care stocks lost 4.4% for the worst performance. The best performing sector went to energy producers, who jumped 24% as a group.
- The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, fell 0.2%, trimming its annual rise for 2016 to 2.8%.
- The US dollar had closed out 2016 with its strongest quarterly rally since 2008 as 10yr Treasuries offered the highest yields since 1999 relative to G7 peers.
- The benchmark 10yr Treasury yield rose 17bps in 2016, after trimming its gain by 4bps last Friday.
- China released its official manufacturing PMI for December over the weekend with a reading of 51.4, down from 51.7 in November and missing the consensus estimate of 51.5. Non-manufacturing PMI edged down to 54.4 from 54.7 over the same period.
- The private manufacturing PMI by Caixin Media and Markit Economics, which was released earlier today, rose from 50.9 to 51.9, exceeding the 50.9 median estimate.
- Authorities plan to step up monitoring of how citizens use their annual quota for buying foreign currencies, Bloomberg reported. China’s central bank said Friday it tightened requirements for lenders to report cross-border transactions by customers as part of stepped-up efforts to curb money laundering.
- Citizens must now pledge that their converted yuan won’t be used for overseas purchases of property, securities, life insurance or investment-type insurance. Violators will be added to a watch list and denied from the annual forex quota for 3 years.
- Australian house values increased at the fastest pace in 7 years in 2016, as record-low interest rates helped fuel demand for property despite warnings such price increases may be unsustainable. The average dwelling value rose 10.9% last year, compared to 7.8% in 2015, data from CoreLogic Inc. released Tuesday showed.
- GDP rose an annualized 9.1% in the 3 months to December 2016 from the previous quarter, when it declined a revised 1.9%, the Singapore trade ministry said earlier this morning. The median estimate was for a 4% expansion.
- GDP rose 1.8% year-on-year in the fourth quarter, beating the 0.3% median estimate.
- With global growth under pressure and the US threatening to turn more protectionist under Donald Trump, the outlook for Singapore’s economy remains cloudy. That will be a consideration for the central bank in its April policy review after it signalled last October it will stick to its neutral currency policy for an extended period of time.
- Spot gold ended higher for its first annual gain since 2012. The precious metal rose 8.0% in 2016, paring the bulk of its gains in the second half of the year after rising by as much as 29% to its peak in July.
- Gold continues to be supported above the $1,150/Oz handle, gaining earlier today by 1.0% to %1,158.87.Oz.
- The next support level below comes in at $1,125/Oz.
- Spot silver advanced as well, rising 1.2% to $16.1186/Oz. Silver registered a 14.7% gain in 2016, snapping a three-year losing streak.
- West Texas Intermediate futures slipped Friday to end the year at $53.72/bbl, good for a 45% rally in the year.
- WTI futures advanced past $54/bbl earlier today, following news reports indicating Kuwait has reduced production by 130,000 barrels per day. Elsewhere, drillers targeting crude in the US added active rigs for a ninth week, boosting the number to the highest in about a year, according to data from Baker Hughes Inc.
- Spot 1.4468
- The Singapore dollar strengthened following better-than-expected 4Q GDP numbers earlier today.
- USDSGD declined 0.2% to 1.4466, paring an earlier rally which saw the currency pair fall back below the 1.4500 handle.
- The Singapore dollar has weakened 2.4% against the greenback in 2016, marking the fourth consecutive year of losses against the USD, its longest run based on Bloomberg data going back to 1981.
- Further support can be found below at the 1.4400 and 1.4150 levels.
- Spot 0.7226
- AUDUSD rallied from previous session’s lows, gaining 0.7% to 0.7228 following better-than-expected PMI data in China this morning.
- The 0.7150 support continues to be key, whilst significant resistance is expected to come in around the 0.7330 region.
- AUDUSD fell 1.5% in 2016, the currency pair’s fourth consecutive yearly drop.
- Spot 1.3411
- USDCAD failed to breach the 1.3450, a short-term resistance level, declining 0.1% to 1.3409 earlier today. The 50-day moving average of 1.3398 is likely to be tested again soon.
- Volatility is likely to pick up again soon, as investors and traders return from their festive breaks and Canadian PMI data due tonight.
- USDCAD fell 3.2% in 2016, snapping three straight years of gains since 2013.
- Spot 6.9685
- The PBOC weakened its fixing today, by 0.18% from 6.9370 to 6.9498 per US dollar.
- USDCNH retreated by as much as 0.2% to 6.9665 earlier in the session.
- Offshore yuan weakened 6.2% against the US dollar in 2016, its third straight year of declines.
- The psychological resistance of 7.0000 remains the key level to watch.
- Spot 117.36
- USDJPY was little changed today, after gaining over its past two sessions.
- The 116.00 resistance has proven to be resilient over the past 2 weeks.
- USDJPY ended 2016 2.9% lower, snapping a 3-year positive streak. The currency pair fell as much as 17.8% in 2016, but recovered back most of its declines amid a strengthening US dollar in the latter half of the year.
- Spot 1.2303
- GBPUSD pared earlier session losses and recovered back to the 1.2300 handle, and was little changed from its previous session’s close.
- All eyes now remain focused on the upcoming UK manufacturing PMI and US ISM manufacturing reports lined up for release later today.
- The next support below comes in at 1.2090.
- GBPUSD declined 16.7% last year, the third straight year of declines and the currency pair’s largest annual drop since 2008.