Daily Observations:

Most Asian stocks rose toward their high for the year as prospects for stimulus in some of the world’s leading economies spurred risk-taking. Global stocks have regained the almost-$4 trillion in value that was wiped out in the days following Brexit.


  • The Fed’s St Louis President James Bullard, who votes on the committee this year, said he sees a “close to zero” impact from Brexit on the US economy. He added that he expects continued slowing in the pace of job growth, thus indicating he might be in favor of low rates through 2018.
  • In a separate speech, the Fed’s Minneapolis President Neel Kashkari commented that there is still a long way from raising rates as inflation is still low.
  • Wholesale inventories in May rose 0.1% from a month earlier, slowing from the previous month’s pace of 0.7% and losing out to expectations of 0.2%. The worse-than-expected figures were weighed by a large decline in automobile inventories.
  • Both the S&P 500 and Dow Jones Industrial Average closed at all-time highs last night.
  • Earnings season kicked of yesterday with Alcoa reporting second quarter profits that topped analysts’ estimates. Most analysts are predicting a fifth straight quarter of shrinking earnings for S&P companies.


  • Japanese stocks have joined the global benchmark in reversing their Brexit referendum losses, spurred by lure of further stimulus. The Nikkei 225 Index reached its highest level since 10th June earlier today, capping an almost-9% rise over the past 3 days.
  • Meanwhile, the yen has weakened around 4.5% since Friday as Prime Minister Abe has ordered his economy minister to compile stimulus measures this month.
  • The Sankai newspaper reported government officials are considering “helicopter money” as a policy option.


  • China’s claim to 80% of the South China Sea was rejected by a Hague tribunal, dealing a blow to the nation’s efforts to assert control over the region. China boycotted the process and dismissed the ruling.
  • The outcome may empower other claimant states and undercut President Xi’s efforts to present China as a responsible player on the world stage. The risk is it now hardens its stance over a waterway that hosts about $5 trillion of trade a year and is a link for global energy shipments.
  • Trade data is due out later today and imports and exports are expected to fall in June, with median estimates of -6.2% and -5.0% respectively, in USD terms from a year earlier.
  • The overnight yuan interbank rate in HK surged to a 5-month high as banks set aside cash for regulatory requirements and on speculation authorities are tightening funding conditions to curb declines in the yuan.

Precious Metals:

  • Spot gold declined as much as 1.8% to $1,327.61/Oz this morning, following fresh 2-year highs made last week.
  • Fresh support for bullion could come in around the $1,310/Oz level.
  • Spot silver declined as well, by 2.4% to a low of $19.8975/Oz, but silver bulls has since wrested back control of the $20/Oz handle.


  • WTI futures expiring in August rallied 4.6% to $46.80/bbl, underpinned by a weaker greenback overnight and favorable comments by OPEC stating that production from countries outside the cartel would fall more than previously expected this year.



  • Spot 1.3482
  • The Singapore dollar remains steady, largely trading within the previous session’s range.
  • The 1.3400 psychological level has been tough to crack over the past few months, as each time USDSGD closed below 1.3400, a strong rebound back above the handle takes place the next trading day. Two consecutive closes below said handle could signal more downside risk for the currency pair.



  • Spot 0.7601
  • AUDUSD is currently at a resistance level, having tested its June high of 0.7648 once already.
  • The currency pair should undergo some consolidation for the time being, at least until before tomorrow’s release of June’s employment change numbers.



  • Spot 1.3069
  • The overnight rally in crude oil weighed on USDCAD as it slid to a low of 1.2982, although the currency pair has since recovered back above the 1.3000 handle.
  • The Bank of Canada is due to release its policy rate decision tonight, and is expected to stand pat at 0.50%.
  • An unexpected rate cut could result in a quick run up to the 1.3300 handle.



  • Spot 6.6893
  • USDCNH is poised to gain the most this month after the PBOC strengthened its fixing by the most in 2 weeks to 6.6891.
  • USDCNH slipped 0.3% to 6.6789 earlier today.
  • However, if trade data released later today is reported to be worse than expected, gains in onshore and offshore yuan could reverse quickly.



  • Spot 1.3298
  • GBPUSD extended gains by a further 1.3% to 1.3338 earlier today, as the pound heads for its longest winning streak in two months.
  • Theresa May’s installation as the UK’s new prime minister has removed much political uncertainty since the aftermath of the Brexit referendum.
  • The key resistance remains at 1.3534, and is a likely region where sterling bears could re-enter.



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UEN: 201419754M

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