Issue#: 328/2017

Spot values at a glance:







Daily Observations:

Most Asian stocks advanced and bonds stayed under pressure as China data kept investors upbeat on the global economy following stronger-than-expected US jobs growth data. Gold extended losses after it reached a 15-week low last Friday, while oil rebounded.


  • World leaders forged a fragile compromise at a summit in Germany that failed to conceal the reality that Donald Trump’s America is increasingly going its own way. Members agreed to fight protectionism while tacitly recognizing Trump’s concerns about excess steel capacity and what he says are unfair trade practices. On climate change, the US was again isolated, with all 19 other members agreeing that the Paris accord on cutting harmful emissions was “irreversible.”


  • The June employment report showed non-farm payrolls rose by 222,000, up from 152,000 in May, and better than the median estimate of 178,000.
  • The unemployment rate ticked higher to 4.4%, from 4.3% in the month prior, while the participation rate gained as well, from 62.7% to 62.8%, signalling more people are looking for jobs.
  • The average hourly earnings rose 0.2% from a month earlier and 2.5% from a year ago, less than the consensus estimates of 0.3% and 2.6% respectively.
  • The US dollar steadied Friday with slight gains overall after last week’s nonfarm payrolls delivered a little something for everyone – with robust jobs growth for dollar bulls, while bears focused on the subdued increase in wages. The Bloomberg Dollar Spot Index swing between gains and losses Friday only the settle little changed from its prior session.
  • US yields continued to rise, lifted by better-than-expected employment growth in June. The benchmark 10yr Treasury yield added 2bps to 2.39% on Friday. The yield curve steepened.
  • US stocks rebounded from the biggest selloff since May, with the S&P 500 Index adding 0.6% and the Nasdaq Composite ending 1.0% higher Friday, boosted by stronger-than-expected hiring data which topped estimates and strengthened risk sentiment. Gains were strongest among tech shares, which have been whipsawed between gains and losses for most of last week.


  • Canada added more than 4times the number of jobs economists had expected in June, capping the best quarter since 2010 and solidifying the view the Bank of Canada will raise interest rates at its meeting next week.
  • 45,300 jobs were added in June, trumping the expected 10,000, although it was less than the 54,500 jobs addition in May. The jobless rate fell to 6.5% from 6.6%.
  • Investors pushed bets for the central bank’s 0.5% rate to rise at the July 12 meeting even further after the job report, with trading in overnight swaps climbing to 94% from 86% on Thursday. The odds were about 5% a month ago, before Governor Poloz and his deputies said that 2 rate cuts in 2015 have done the job reviving activity.


  • The ECB is likely to decide on the next change in its stimulus settings in the fall, when it will continue the process of tweaking its measures to reflect the euro area’s upturn, according to Governing Council member Francois Villeroy de Galhau.
  • The French central-bank governor’s remarks may be the most definitive yet on when the ECB will take action on its 2.3 trillion-euro asset-purchase program, which is currently scheduled to run until the end of the year. While he is just one of 25 Governing Council members who decide monetary policy for the currency bloc, concerns are rising among some of his colleagues that time is running out if they are to avoid undesirable market volatility.


  • Industrial production in May shrank 0.1% month-on-month and 0.2% year-on-year, underperforming their respective consensus estimates of 0.2% and 0.4% expansions.
  • Manufacturing production over the same periods underwhelmed as well, falling 0.2% from a month ago and adding 0.4% from a year before, less than the 0.5% and 1.0% expected figures.


  • China’s producer price gains held up, signalling that demand in the world’s second-largest economy is maintaining pace for now, even in the face of regulatory curbs.
  • China’s PPI in June rose 5.5% year-on-year, matching May’s rise and economists’ expectations as well. CPI over the same period saw a 1.5% gain, less than the 1.6% rise predicted.


  • Australia’s top-performing pension fund over the past 3 years wants to invest in more toll roads and airports, betting infrastructure assets will offer among the most reliable returns over coming decades. Sam Sicilia, who oversees A$25 billion of assets at Melbourne-based Host-Plus Pty Ltd., is seeking board approval to invest about 12% of the fund’s capital in infrastructure, from 10% now. Australian funds managing retirement savings now hold A$100 billion in infrastructure assets, double the amount 4 years ago, data from researcher Rainmaker Group show.


  • Singaporean sovereign wealth fund GIC Pte warned that investors are being too complacent about looming market risks, while disclosing that its main performance gauge fell for the second straight year.
  • According to GIC CEO Lim Chow Kiat, the “uncertainty level is very high”, in contrast to “very low” actual equity price volatility, thus indicating investor complacency.

Precious Metals:

  • Spot gold neared 4-month lows Friday, falling by as much as 1.0% to $1,207.43/Oz, before settling at $1,212.46/Oz. The yellow metal was little changed earlier today.
  • Demand in gold has been hit following Friday’s better-than-expected payrolls data, fuelling speculation that the Fed’s rate hike decision remains firm. The next support key level lies at $1,200/Oz.
  • Hedge funds’ net-long positions on gold fell last week by more than half, the biggest reduction since 2015. Exchange-traded products backed by precious metals saw cash outflows over the past month, while most other commodity funds took in more investor money. Total assets in SPDR Gold Shares, the world’s top bullion ETF, fell to the lowest since March last week.
  • Silver for immediate delivery plunged to its lowest since April 2016, dropping by as much as 4.0% to $15.3666 /Oz, before ending the week 2.5% down at $15.6150/Oz. The metal extended losses earlier today, falling by another 0.9% to $15.4722.
  • Following its break below the $16.25/Oz level last week, the metal has completed a technical breakout to the downside from the multiyear wedge pattern formed since end 2015; momentum stays firmly to the downside with the next support coming in around $15/Oz.


  • Crude oil futures expiring in August gained earlier today, climbing 1.1% to $44.72/bbl after a weekly loss as Kuwait said Libya and Nigeria may be asked to cap supply to help rebalance the market.
  • The African producers, exempt from the OPEC-led agreement to cut output, have been invited to a July 24 meeting to discuss the stability of their production, Kuwait’s oil minister said.
  • US crude drillers increased the rig count by 7 to 763, Baker Hughes Inc. said Friday.
  • Qatar National Bank said the oil market will be oversupplied in 2018 unless the deal to limit production is extended for the entire year rather than just through the first quarter, according to a July 9 report. However, OPEC Secretary General Mohammed Barkindo said compliance with the cuts has increased since May and it’s too soon to talk about deeper curbs.


  • Spot 1.3822
  • USDSGD was little changed earlier as the pair continues to consolidate above its 1.3800 support.
  • The pair has found steady support at 1.3800 and its downward momentum over the past couple of months seems to have abated.



  • Spot 0.7613
  • AUDUSD advanced 0.2% higher earlier to 0.7615, after the weekend’s G-20 meeting, in which Australian steel and aluminium are set to be exempt from harsh US import tariffs after lobbying from Malcolm Turnbull and Finance Minister Mathias Cormann..



  • Spot 1.2881
  • USDCAD ended 0.4% lower at 1.2876, its lowest close since September last year, following better-than-expected jobs growth numbers last Friday, cementing the case for the BOC to hike rates this week.
  • With a rate hike this week more or less fully priced in, the downside is likely to remain capped at around the 1.2800 handle.



  • Spot 6.8006
  • The PBOC weakened its fixing by 0.07% to 6.7964 per US dollar earlier.
  • USDCNH slipped 0.1% to 6.7972 earlier. The pair has been mostly steady over the past week, mainly consolidating around the 6.8000 handle.



  • Spot 114.17
  • The yen extended its drop after BOJ Governor Kuroda earlier today reiterated the central bank remains ready to adjust policy as needed following its intervention last week to cap rising yields.
  • USDJPY rose 0.6% last Friday and added another 0.3% to 114.20 earlier today, nearing a 15-week high.



  • Spot 1.2893
  • GBPUSD slipped 0.5% to 1.2890 last Friday and remained little changed earlier today following last week’s poorer-than-expected factory data.
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UEN: 201419754M

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