Daily Observations:

Global equities are almost back to where they were when the UK voted to leave the EU. Stocks are finding support from the prospect policy makers will act to stem any fallout from Brexit, with the Bank of England tipped to cut rates this week and the Bank of Japan poised to ramp up fiscal stimulus following Abe’s election victory over the weekend. Stocks were also buoyed by Theresa May’s election as the UK’s new prime minister.


  • The S&P 500 Index closed at a record high last night, 0.3% higher at 2,137.16.
  • Kansas City Fed President Esther George, who is a voter on the committee this year, reiterated her hawkish stance, citing the June rebound in US hiring as a key reason to push rates further above zero.
  • More Fed officials will be speaking later today and during the rest of the week, and the majority of them will be expected to adopt a more-hawkish view, given last Friday’s positive jobs report as well as markets’ quick recovery post-Brexit.


  • Theresa May will become UK’s next prime minister and take office by Wednesday night, earlier than expected, after her only challenger for the role dropped out and giving her the task of steering the country successfully out of the European Union.


  • Prime Minister Shinzo Abe has said he plans to add fiscal stimulus following the ruling party’s victory over the weekend. Abe said he will order measures to support domestic demand, including plans to speed up the construction of high-speed trains.
  • According to Nikkei, the amount could be more than 10 trillion yen ($98 billion) and the government is considering issuing new debt for the first time in four years. More details are expected to be revealed later today.


  • A Hague ruling will come about 5pm SGT on China’s claim to 80% of the South China Sea; Beijing’s reaction will be closely watched.

Precious Metals:

  • Spot gold declined 0.5% while spot silver added 0.8%.
  • Gold has been struggling to trade above $1,375/Oz over the past week. A close below $1,350/Oz and the precious metal could correct back to the $1,310/Oz support level,


  • WTI futures expiring in August settled 1.4% yesterday, its lowest close in almost 2 months.
  • Iran plans to double crude exports, according to a director at the nation’s state-run National Iranian Oil Co., while Libya’s state crude producer is seeking to reopen oil ports and restore crude output, according to its chairman.
  • WTI futures are currently trading near its key support level around the $44/bbl handle. Beyond that, the next support resides at $40/bbl.



  • Spot 1.3499
  • USDSGD rose 0.3% earlier today to 1.3528 but soon reverted back below 1.3500.
  • More sideways action look to be in store for the currency pair.



  • Spot 0.7584
  • The Aussie dollar resumes its ascent, climbing as much as 0.4% to 0.7593, the highest since Brexit.
  • The AUDUSD is approaching a key area of resistance, 0.7600 – 0.7650. A breakout beyond could result in the currency pair moving higher to test its 2016 highs of 0.7835.



  • Spot 1.3102
  • USDCAD rose as much as 0.5% to 1.3140, its highest in a month.
  • The Canadian dollar looks likely to remain depressed following last Friday’s poor jobs report numbers and crude oil’s continued weakness.
  • The immediate-term resistance of 1.3188 looks likely to be tested in the near future.



  • Spot 6.7020
  • The PBOC weakened its daily fixing today by 0.2% to 6.6950, given the pickup in USD overnight.
  • USDCNH remains largely unchanged, as the yuan strengthened back towards yesterday’s close, despite a weaker fixing, spurring speculation of a possible PBOC-led intervention to defend the 6.7000 level.



  • Spot 1.3082
  • Following the installation of the nation’s new prime minister, GBPUSD rallied 0.9% back above the 1.3000 handle.
  • The support-turned-resistance level of 1.3121 remains a whisker away. However, the more significant resistance lies further away at 1.3534.


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UEN: 201419754M

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