Daily Observations:

The yen plunged and Tokyo equities jumped after it was reported that the BOJ is preparing a 29 trillion yen stimulus package. The risk-on sentiment boosted Asian equities as well as most indices edged higher. China stocks plunged on a report of possible wealth management product curbs. The Fed is due to announce its monetary policy decision tomorrow morning.

US:

  • The S&P 500 Index was little changed amid mixed corporate earnings, as investors turned attention to tomorrow morning’s Fed interest rate review.
  • Treasuries ended mixed with 2-year yields higher at 2bps and 10-year yields down 1bp to 1.56%.
  • The US dollar pared most of yesterday’s sell-off after US consumer confidence, Richmond Fed manufacturing index and new home sales all beat estimates.

Japan:

  • According to Kyodo news reports, Prime Minister Abe said that a fiscal stimulus package exceeding 28 trillion yen, or $265 billion, will be approved by the Cabinet on Aug 2nd.

China:

  • China stocks slumped earlier today by the most in six weeks amid concern regulators are moving to limit equity investments by some wealth-management products.
  • Authorities are considering tightening curbs on the nation’s $3.6 trillion market for WMPs, and may set a limit on how much WMPs can invest in equities and “non-standard assets” such as loans, according to 21st Century Business Herald report.

Australia:

  • 2Q headline CPI rose 0.4% quarter-on-quarter and 1.0% year-on-year, the median estimates were 0.4% and 1.1% respectively.
  • Another inflation measure which the RBA looks at, the trimmed mean CPI rose 0.5% quarter-on-quarter and 1.7% year-on-year, faster than the estimates of 0.4% and 1.5% respectively.

Precious Metals:

  • Spot gold remains steady as it continues to consolidate above the $1,310/Oz support area, slipping 0.3% to $1,316.54/Oz earlier today.
  • Silver for immediately delivery fell 0.6% to $19.5487/Oz.
  • A key downside risk for precious metals would be a more hawkish-than-expected Fed statement tomorrow morning.

Oil:

  • Crude oil futures expiring in September slid 0.5% to a three-month low of $42.92/bbl.
  • US crude inventories is expected to have slid by 2.25 million barrels, while gasoline supplies are seen increasing by 600,000 barrels, according to a Bloomberg survey ahead of tonight’s release of Energy Information Administration report.
  • The $40/bbl handle could be tested soon, especially if US dollar strength continues to hold.

 

USDSGD:

  • Spot 1.3575
  • USDSGD remains largely unchanged ahead of monetary policy decisions by the Fed and BOJ over the next 2 days.
  • Immediate-term resistance at 1.3639 could be breached should strength in the greenback persist. The next resistance above comes in at 1.3722.

 

AUDUSD:

  • Spot 0.7481
  • Faster-than-expected CPI gains this morning suggest that the RBA may not need to rush in cutting rates, after Governor Stevens’ last cut just 3 months ago.
  • AUDUSD jumped 0.5% to 0.7566 following the data release before paring gains and reversing to fall 0.9% back below 0.7500.

 

USDCAD:

  • Spot 1.3178
  • USDCAD reversed previous day’s gains to decline 0.6% back below the 1.3200 handle.
  • Upside risk continues to be elevated for the currency pair, as depressed oil prices should drive the loonie weaker while a hawkish Fed statement could potentially strengthen the greenback.
  • The 1.3300 handle could be reached by the end of the week.

 

USDCNH:

  • Spot 6.6766
  • The PBOC raised its daily fix rate for the second day, by 0.2% to 6.6671 against the US dollar.
  • USDCNH was largely unchanged, dropping only as much as 0.1% to its low of 6.6734 earlier.

 

GBPUSD:

  • Spot 1.3130
  • GBPUSD recouped most of its previous day’s losses to maintain above the 1.3100 handle. The currency pair continues to consolidate above said handle ahead of key UK GDP data due for release later today.
© Jachin Capital Pte Ltd

UEN: 201419754M


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