Asian stocks are mostly in the red together with European equity indices as commodities sank to levels last seen in May, amid a mixed batch of US corporate earnings and Kuroda’s rejection of the idea of helicopter money.
- US equities fell from record levels as both the S&P 500 and Dow Jones Industrial Average indices slipped 0.4%. Valuations on the former had climbed above 20 times earnings for the first time in seven years a week ago.
- Intel, American Express and Southwest Airlines reported worse-than-expected 2Q results, while Qualcomm and eBay beat analysts’ estimates.
- The dollar maintained losses from yesterday, when the Bloomberg Dollar Spot Index retreated 0.2% after 4 days of gains.
- Home sales in June rose unexpectedly by 1.1% from a month earlier to the highest level in more than 9 years; a decline of 0.9% was expected.
- US weekly jobless claims fell 1,000 to 253,000 (vs estimated 265,000), the lowest level in 3 months.
- US Treasury Secretary Jacob Lew commented it’s currently not the moment for the kind of coordinated action carried out by central bankers back in 2008 and 2009.
- The ECB kept its monetary policy unchanged, as expected. Mario Draghi joins a growing club of central bankers who are having trouble discerning how recent macro events will impact the economy.
- Draghi cited Brexit, geopolitical uncertainty and subdued EM growth prospects in yesterday’s ECB decision. He also added that a public backstop for non-performing loans will be useful.
- Office rents fell 3.5% in the three months ended June, data from the URA showed earlier today, more than the 2.1% drop in the 1Q 2016 and the fifth decline in a row. Residential rents fell for an 11th
- In an interview with BBC Radio yesterday, BOJ Governor Kuroda rejected the idea of helicopter money, saying that there is “no need and no possibility” for it.
- Investors should however treat Kuroda’s remarks with caution. Kuroda rejected the notion of adopting negative interest rate policy in January, only to do the opposite a week later. In 2014, he also surprised markets by adding stimulus a few days after he said he expected the inflation trend to improve.
- Gold for immediately delivery rebounded last night after hitting a two week low, rising 1.1% to $1,333.97/Oz before paring back some gains earlier today.
- Spot silver reversed previous day’s losses and rebounded back to the $20/Oz level earlier today.
- Despite yesterday’s rebound, both gold and silver look set to extend its weekly decline from last week.
- WTI futures expiring in August extended losses today, falling a further 0.8% to $44.40/bbl.
- Oil looks set for a weekly decline as the US heads towards the end of its summer-driving season with ample crude and motor fuel stockpiles.
- The US government reported a ninth straight week of declines of its crude stockpiles, making it the longest stretch of declines on record.
- Spot 1.3553
- USDSGD maintained its previous day’s losses, following 4 consecutive days of gains prior.
- 1.3600 is turning out to be a decent resistance level. The 100-day moving average of 1.3590 should provide resistance as well.
- Spot 0.7471
- AUDUSD dropped to near 2-week lows, falling 0.4% to 0.7460 earlier and extending this week’s decline past 1.5%.
- ANZ says that it sees a low risk of the RBA cutting rates by more than 25bps in August, even in the event of a lower-than-expected CPI print next week.
- Spot 1.3130
- USDCAD rose to near 7-week highs, on the back of weaker crude oil prices. The currency pair added 0.5% to 1.3135 earlier today.
- Inflation data will be released tonight and is forecast to have slowed from the prior month.
- Spot 6.6741
- The PBOC fuelled speculation earlier this week that it was defending the currency from slipping past 6.7 per dollar by strengthening its daily fixing twice even as the greenback broadly advanced.
- The central bank earlier today strengthened its reference rate by the most this month by 0.3% to 6.6669.
- Spot 1.3273
- GBPUSD advanced 0.6% to 1.3260 and is poised to end positive for the second week running.
- To the upside, 1.3500 remains as the key resistance level to be broken.