Spot values at a glance:
Most Asian equities followed US index futures and the dollar lower earlier today, following news that the 2 more Republican senators decided to vote against the US health-care bill. The Australian dollar gained after the RBA said the economy is improving. Crude oil maintained near overnight lows while gold extended gains.
- Two Republican senators said Monday night UST they oppose Majority Leader Mitch McConnell’s proposal to replace Obamacare, effectively killing the current version of the legislation. This latest development delivers a big blow to President Donald Trump’s promise in repealing the Affordable Care Act, and more importantly, casts a cloud on his broader economic revitalization agenda.
- The Empire Manufacturing index for July declined to 9.8, from 19.8 in June, faring worse than the median estimate reading of 15.0.
- Laurence D. Fink, chief executive officer of BlackRock Inc., said the US economy is growing more slowly than expected and will expand modestly at 2.4% in the second quarter. He expects the economy to face “dark clouds” and added while corporate earnings have been good, the rise in personal income is still lacking. He fretted about whether the White House can quickly pass key reforms. He also fretted about whether the White House can quickly pass key reforms.
- The latest Bloomberg National Poll shows 58% of Americans believe they’re moving closer to realizing their own career and financial aspirations, tied for the highest recorded in the poll since the question was first asked in February 2013. However, just 40% of Americans approve of the job Donald Trump is doing in the White House. Another concern on the horizon is the new subprime boom in autos.
- Netflix Inc., the streaming-video provider, scored a record second quarter and surpassed forecasts for subscriber growth and boosted its international audience past the domestic total for the first time. Netflix shares surged about 10% in afterhours trading. The company will reach at least 20% of broadband households in 5 of its largest markets outside the US by the end of the year, according to Instinet.
- US indices were largely unchanged as investors looked toward more quarterly results of heavyweights that will be released this week, which include Bank of America Corp., Goldman Sachs Group Inc., Microsoft Corp. and General Electric Co..
- The US dollar continued to weaken further in Asia trade today, following increased speculation that the US health-care reform bill will fail. The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peer, declined 0.4% to a fresh 10-month low.
- Treasury yields dropped, with the benchmark 10yr yield shedding 1bp to 2.30% earlier today.
- The ChiNext index of small-cap shares plummeted 5.1% on Monday, its biggest loss in seven months, and a further 0.7% earlier today to extend its retreat this year to 16%. That’s worse than any of the 96 global benchmarks tracked by Bloomberg, and compares with a 10% advance by the MSCI World Small Cap Index.
- Concern about rising funding costs, corporate governance issues, liquidity pressures and tougher regulatory oversight are hammering companies on the Shenzhen gauge, with at least 15 members falling by the 10 percent daily limit on Monday. The rout was said to have been triggered by a high-level conference over the weekend attended by President Xi Jinping who announced the creation of a cabinet-level committee to coordinate financial oversight.
- Australia’s central bank signalled it isn’t ready to join global counterparts in unwinding policy stimulus as the outlook for property and jobs remain clouded, despite a more positive global picture. In the RBA’s minutes of its July policy meeting, members also discussed the level of Australia’s neutral interest rate, saying it had dropped since 2007 and now equated to a neutral nominal cash rate of around 3.5%. The central bank added “there is significant uncertainty around this estimate”.
- “Members regarded the improvement in the world economy over the preceding months as a welcome development,” the RBA said. “Nevertheless, they assessed that current economic conditions in Australia, and the outlook for growth and inflation, meant that developments in the labor and housing markets continued to warrant careful monitoring.”
- Spot gold looks set to rise for the sixth straight day, gaining 0.6% to $1,238.02/Oz earlier today as the US dollar weakened further after 2 more Republican senators decided to vote against the US health-care bill.
- The next resistance stop lies around the $1,250/Oz handle, coinciding with the precious metal’s 100-day moving average.
- Silver for immediate delivery added 0.9% to $16.1850/Oz, rising in tandem with gold. Downside risk continues to remain high for now though, with the next support coming in around $15/Oz.
- Crude oil futures expiring in August fell 1.1% to the $46/bbl handle in New York last night, after a US government report said that output from major US shale plays will reach 5.6 million barrels a day in August, an all-time high.
- Furthermore, Libya, which is exempt from OPEC’s output-cut agreement, has increased production to 1.1 million barrels a day, Bloomberg reported.
- Spot 1.3680
- USDSGD extended its decline below the 1.3700 handle, falling 0.1% earlier today to 1.3669 amid continuing USD weakness.
- With the key level at 1.3700 breached, the next support region comes in around 1.3500.
- Spot 0.7899
- AUDUSD jumped 1.1% to 0.7908, a 2-year high, following after the RBA released minutes from this month’s policy meeting, a gathering that was seen at the time as taking a dovish tack amid global central bank hawkishness
- Following the breach above the key level at 0.7835, the next resistance lies at the psychological 0.8000 handle.
- Spot 1.2650
- USDCAD was largely unchanged earlier today as the pair continues to hover near a 14-month low.
- The Canadian dollar has been the best performing currency in the world over the past 2 months. The next bastion of support lies at 1.2460 – the pair’s 2-year low.
- Spot 6.7527
- The PBOC weakened its fixing by 0.07% to 6.7611 per US dollar earlier.
- USDCNH slid 0.2% to 6.7519, a 6-week low, amid continued dollar weakness.
- USDCNH was largely unchanged following a 0.6% decline last week.
- Meanwhile, onshore yuan rose for sixth day in a row, the longest run of gains since 2015, boosted by a stronger central bank fixing and data showing Chinese GDP held up in the second quarter.
- Spot 112.15
- USDJPY retreated to a key support region earlier today, falling 0.4% to 112.08 largely due to broad USD weakness today.
- The 50-, 100- and 200-day moving averages all reside in close proximity below, around the 111.80 region.
- Spot 1.3089
- GBPUSD erased an overnight decline, rising 0.2% to 1.3095 earlier.
- The pair broke above the key 1.3000 handle convincingly last Friday, and momentum continues to remain firmly to the upside. The next point of resistance at 1.3450 looks to be tested next.