Daily Observations:

Asian stocks rose for a fifth day as Chinese economic data beat estimates following an upbeat start to the corporate earnings season in the US. Japanese equities rallied and the yen fell on prospects of more stimulus measures.

US:

  • US PPI in June rose 0.5% from a month earlier, better than the 0.3% anticipated, with strong increases across most goods and services components and largely driven by higher costs for energy.
  • The S&P 500 Index rose 0.5% to a new record, led higher by bank stocks and JP Morgan’s better-than-expected earnings.
  • The Fed’s Atlanta President Dennis Lockhart, who is a non-voter this year, commented that two rate hikes this year are still possible but stressed caution and patience with any future interest rate increases. He also added that the US election may damp spending until after November.
  • Laurence Fink, CEO of the world’s largest asset manager Blackrock Inc., said the current rally in equities may not be justified and won’t last unless earnings are better than anticipated.

France:

  • A truck loaded with arms drove into a late-night crowd in Nice on the country’s Mediterranean coast, killing at least 77 people and injuring more than a hundred as the nation celebrated its Bastille Day holiday. The Pairs prosecutor’s office called it a terrorist attack.

UK:

  • The Bank of England unexpectedly held rates steady at 0.50%, surprising a market that had priced in an 80%-chance of a cut, but hinted at a chance of easing in its next meeting in August.

Japan:

  • Former Fed chairman Ben Bernanke met Japanese leaders in Tokyo this week and was reported to have floated the idea of the nation issuing perpetual bonds.
  • Officials on Wednesday denied a newspaper report that they are considering policies involving helicopter money, which involves direct financing of government spending by the central bank.

Singapore:

  • The Singapore securities market opened as usual on Friday following a technical malfunction the previous day that say Southeast Asia’s largest bourse forced to halt equity trading for more than half of the trading day.

China:

  • China’s economy stabilized as lending and consumer spending perked up late in the second quarter this year.
  • GDP in the second quarter this year rose 6.7% from a year earlier, beating the 6.6% estimated by economists surveyed by Bloomberg and in line with the government’s target of at least 6.5% for the full year.
  • Industrial production in June rose 6.2% from a year earlier, better than the 5.9% surveyed, while retail sales jumped 10.6% year-on-year, trumping the 9.9% rise expected.
  • Fixed asset investment grew at 9.0% year-on-year, slower than the 9.4% projected. New yuan loans in June totalled 1.38 trillion yuan, a 40% increase from the prior month, and significantly more than the 1 trillion predicted.

Precious Metals:

  • Spot gold slipped 0.7% to $1,320.35/Oz, a 2 week low, last night and remains on track for its first weekly drop in seven, as risk appetite returns and investors turn away from haven assets.
  • Spot silver similarly fell 0.7% as well to $20.0110/Oz, but has since pared back losses.

 

USDSGD:

  • Spot 1.3434
  • USDSGD slipped 0.4% to 1.3409 earlier today, the lowest in more than 2 weeks.
  • As the currency pair approaches the 1.3400 level, it will be interesting to see if it can break convincingly below the level this time, having failed to do so the last 3 times in past 3 months.

 

AUDUSD:

  • Spot 0.7651
  • AUDUSD reversed losses and rallied to 0.7676, its highest level in more than 2 months, following positive GDP and factory output data from China.
  • The next key resistance level is the 2016 high of 0.7835, although the currency pair could take a breather around 0.7750 before that.

 

USDCAD:

  • Spot 1.2898
  • USDCAD extended its previous day’s decline of 0.7% by a further 0.6% last night to 1.2863.
  • Governor Poloz said in a Wall Street Journal interview that concerns of a strained housing market can’t be the main focus of monetary policy and won’t be something that prevents them from changing interest rates. He added that record levels of household debt aren’t as dangerous today as banking regulation has been strengthened worldwide.
  • The top currency forecaster, Day by Day SAS, in the second quarter this year, according to Bloomberg rankings, has predicted the Canadian dollar to weaken to C$1.35 against the greenback during the next couple of months before strengthening into the first half of next year to C$1.20.

 

USDCNH:

  • Spot 6.6904
  • Offshore yuan advanced following the release of China’s 2Q GDP which beat estimates and stronger fixing from the PBOC for a third-straight day.

 

GBPUSD:

  • Spot 1.3458
  • Following the unexpected decision to hold rates steady by the BOE yesterday, USDGBP rallied 1.7% to a two week high of 1.3475.
  • The key resistance area of 1.3500 – 1.3550 nears, and some consolidation is expected as the currency pair approaches it.
  • Traders are pricing in a 55% chance of a rate cut in next month’s meeting, according to Bloomberg pricing data.

 

 

© Jachin Capital Pte Ltd

UEN: 201419754M


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