Daily Observations:

The rally that drove Asian stocks to levels last seen in April shows signs of flagging as investors await details of Japan’s stimulus plans and the corporate earnings season begins in earnest. The UK is expected to cut interest rates later today.


  • According to the Fed’s latest Beige Book, the US economy expanded at a modest pace since mid-May amid “slight” price pressures and some softening in consumer spending, offering little evidence to suggest any imminent rate hike.
  • Dallas Fed President Robert Kaplan, who is a non-voter this year, said earlier that rates should be lifted in a “slow and patient manner”, while his colleague in Philadelphia, Patrick Harker who doesn’t vote this year as well, said up to two hikes may be appropriate this year.
  • US import prices in June rose 0.2% from a month earlier, less than the expected 0.5% and slowing from the prior month’s pace of 1.4%.
  • Yields fell across Treasury maturities as demand at Wednesday’s auctions climbed to the highest level since September. 10 year Treasury yields fell to 1.48%, slipping for the first time this week.
  • PIMCO’s Total Return Fund increased its holdings of US government debt to the highest in 18 months. Treasuries and related securities account for 39.7% of the fund’s assets in June, up from 36.4% the prior month.


  • The Bank of Canada kept rates at 0.50%, as expected. The BoC downplayed the impact of Brexit and weaker US demand, and expects an export-led rebound to occur soon.
  • The central bank refrained from altering its policy rate, and cited favorable fundamentals including low market-determined rates and previously announced fiscal measures for its expectation of a second half recovery.
  • GDP is expected to contract 1.0% in 2Q but should recover and advance by 3.5% in 3Q amid resumption of oil production and restorative efforts in the wake of wildfires.
  • The implied odds of a further rate cut by year-end fell to 16% from 31% before the announcement, according to futures data compiled by Bloomberg.


  • The Bank of England is expected to cut rates by at least 25 basis points later this evening, a Bloomberg survey of economists indicated.


  • Koichi Hamada, a key economic adviser to Abe, said that boosting fiscal and monetary stimulus at the same time would be a good strategy, though helicopter money would be a “very risky gamble”.


  • 2Q GDP grew 2.2% from a year earlier, and an annualized 0.8% from the previous quarter; estimates were 2.2% and 0.9% respectively.
  • Singapore’s economy grew at a faster pace in the second quarter following a rebound in the services industry, which expanded an annualized 0.5% following a 4.8% contraction the previous quarter. The manufacturing and construction sectors grew 0.3% and 0.6%, respectively, over the same period.


  • 7,900 jobs were added in June, less than the 10,000 expected and the 19,200 added last month. The employment rate matched estimates at 5.8%.
  • Full time employment grew by 38,400, while part time jobs fell by 30,600. The participation rate ticked up to 64.9%, from 64.8%.
  • The jobs report underscored an economy showing greater domestic strength with industries like construction, tourism and education helping Australia soak up unemployed miners as its resource boom winds down.


  • In USD terms, exports in June rose 1.3% from a year earlier while imports fell 2.3%; expected figures were 0.3% and -1.2% respectively. In yuan terms, shipments overseas fell 4.8%, better than the 5.0% drop expected, while imports declined 8.4%, more than the 6.2% fall predicted.

Precious Metals:

  • Spot gold rebounded earlier today from yesterday’s 2 week low of $1,327.61/Oz, although some near-term resistance at $1,350/Oz seems to have developed. To the downside, $1,310 remains the support level in focus.
  • Spot silver continues to hold up well above the $20/Oz handle.


  • WTI futures expiring in August slumped 4.4% to $44.75/bbl, after jumping 4.6% on Tuesday, following bearish US inventory data and a warning from the International Energy Agency about the global supply glut.



  • Spot 1.3474
  • Reaction in USDSGD was largely muted following the release of last quarter’s GDP. The currency pair rose 0.2% to 1.3481, but continues to remain well below the 1.360o handle.



  • Spot 0.7618
  • AUDUSD remains well bid above 0.7600, although the resistance at 0.7650 continues to cap the currency pair.
  • Traders are pricing in a better than 50% chance of a rate cut in August, little changed from what it was prior to this morning jobs report release, according to swaps data compiled by Bloomberg.
  • However, in view of stronger full time employment data, the upside risk for AUDUSD has increased.



  • Spot 1.2945
  • Following last night’s BoC rate decision, USDCAD fell 0.8% to a one-week low of 1.2926, in spite of oil’s overnight slump.
  • There has been increased pressure to the downside, and USDCAD looks likely to test 1.2900 over the near future.



  • Spot 6.6951
  • USDCNH was little changed as PBOC strengthened its yuan fixing for the second day in a row.



  • Spot 1.3188
  • Sterling weakened 1.4% to 1.3106 against the greenback earlier today, following 3 consecutive days of gains, in expectations of a rate cut by the BOE later today.


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UEN: 201419754M

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