Daily Observations:

Asian stocks rose to three-month highs after positive earnings surprises drove US equities to a fresh record; expectations that central banks will unleash fresh stimulus continue to fuel stock-market gains as well. While the ECB is expected to stand pat later today, most analysts anticipate further easing this year. Japan and New Zealand central banks are expected to embark on further monetary easing as well. Indonesia’s central bank is forecast to lower interest rates, following cuts in Malaysia and Turkey since the start of last week.


  • The Dow Jones Industrial Average capped a ninth straight gain of 0.2% in its longest rally since 2013, while the S&P 500 Index added 0.4% to close at yet another record high.
  • The earnings season so far has delivered more positive surprises, with 79% of the companies that have reported so far beating estimates.
  • The greenback extended its recent rally; the Bloomberg Spot Dollar Index added 0.1% following the previous day’s 0.5% rally to reach its highest in more than six weeks. The dollar strengthened across the board against most major currencies, expect for sterling.
  • Bloomberg pricing data is placing a 25% chance that the Fed hikes by September, and a 47% chance that they hike by December.


  • The ECB is due to conclude its policy meeting later today and is expected to stand pat, although most expect a fresh round of stimulus to be introduced by the end of the year.


  • The unemployment rate in May fell below 5% for the first time since 2005, while the claimant count rate maintained at 2.2% as expected. Wage data was a mixed bag as basic pay growth slowed to 2.2% month-on-month, from 2.3%. The numbers reflect data prior to June 23rd’s Brexit referendum.


  • Turkey’s lira fell to an all-time low after S&P Global Ratings downgraded the country’s debt to BB, from BB+, with a negative outlook.
  • President Erdogan has declared a 3-month state of emergency to continue its purge.
  • About 60,000 people have been detained, suspended, fired or stripped of their professional accreditation since the coup, according to Bloomberg estimates.


  • Japan is said to be considering a 20 trillion yen stimulus package, twice the size that had been previously reported in the local media, Kyodo News reported.
  • The yen weakened past 107 against the dollar, extending its slump over the past 2 weeks to 7% and giving back all of its post-Brexit gains.

Precious Metals:

  • Spot gold dropped to its lowest in almost 2 weeks, falling 0.9% earlier today to $1,310.85/Oz as a stronger dollar and recent renewed investor confidence has seen a drop in safe haven demand.
  • Gold for immediate delivery is currently near a key support region – $1,300/Oz to $1,310/Oz, and renewed buying is expected to come in around these levels.
  • Spot silver slumped 2.5% to $19.2425, a near-term support level. The longer-term support level lies around $18.50/Oz.


  • The US government reported a ninth straight week of declines of its crude stockpiles, making it the longest stretch of declines on record.
  • Crude oil futures expiring in August settled 0.7% higher at $45.75/bbl, rebounding from a key support level at $44.50/bbl earlier in the session.
  • The next support beneath comes in around $40.50/bbl.



  • Spot 1.3585
  • USDSGD climbed to 1.3602 last night following broad US dollar strength, bringing its advance over the past week to 1.1%.
  • A close above the 1.3600 handle could signal more room for the currency pair to rise, with a potential target at the next resistance level of 1.3722.



  • Spot 0.7479
  • AUDUSD extended its downward trend, falling 0.5% to 0.7454 before paring some losses this morning.
  • Analysts are expecting inflation data, due next week, to dip below the RBA’s 2% – 3% target range for the first time this century, which increases the probability of an RBA-rate cut next month.



  • Spot 1.3052
  • USDCAD remains largely unchanged, after the currency pair rebounded off the 1.3100 resistance last night.
  • Inflation data will be released tomorrow, and is forecast to have slowed from the prior month.



  • Spot 6.6731
  • The yuan remains stronger than 6.70 against the dollar ahead of the G-20 finance ministers meeting in Chengdu this weekend.
  • The PBOC strengthened its fixing the most in three weeks, by 0.11% to 6.6872.
  • USDCNH fell 0.1% to a two-week low of 6.6720.



  • Spot 1.3230
  • GBPUSD rebounded from its lows yesterday to register a 0.8% gain to its high of 1.3275 reached this morning on the back of positive inflation and jobs data over the past 2 days.
  • Sterling was further boosted by a BOE survey which showed that despite an increase in business uncertainty after the June 23 referendum, firms sought to maintain “business as usual”.


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UEN: 201419754M

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