Issue#: 306/2017

Spot values at a glance:







Daily Observations:

Most Asian equities rose, despite a private gauge of China’s manufacturing falling into contractionary territory. The US dollar remained weak following last night’s selloff, while gold and crude oil held onto gains.


  • The Chicago Purchasing Manager Index in May rose to 50.4, from 58.3 in April, better than the median estimate of 57.0 from economists.
  • Pending home sales in April slid 1.3% from a month ago, falling at a quicker pace than 0.9% fall in March; analysts had expected a 0.5% gain.
  • High-income taxpayers may be anticipating a future tax cut from President Donald Trump. But they may also be hindering Trump’s aim to persuade Congress to raise the government’s debt limit, according to a Bloomberg report. Treasury’s monthly budget statement for April showed weaker-than-expected income tax receipts. The drop in tax revenue is significant enough to alarm top officials who have urged Congress to pass “clean” legislation raising the debt ceiling without policy riders by August.
  • The Fed’s Beige Book economic report, based on anecdotal information collected by the 12 regional Fed banks through May 22, said several sectors from manufacturing to housing continued to expand slowly. Consumer spending softened, however, with many districts reporting little or no change in non-auto retail sales. A majority of districts reported that firms expressed positive near-term outlooks; however, optimism waned somewhat in a few districts, the report added.
  • The Fed’s Dallas President Robert Kaplan is sticking to his outlook for 2 more rate-hikes this year, even as he acknowledged recent declines in US core inflation.
  • The US dollar sold off overnight, with the Bloomberg Dollar Spot Index falling 0.2% in New York to cap off a third straight monthly loss.
  • US Treasuries continue to be supported by month-end buying amid continuing declines in inflation expectations; the benchmark 10yr Treasury yield fell 1bp to 2.20%.
  • The S&P 500 Index slipped 0.1%, with banks continuing to weigh on markets as Trump administration promises to roll back regulations and boost growth have yet to stoke inflation expectations. Markets have kept within striking distance from all-time highs with the help of defensive and technology stocks.


  • The Canadian economy expanded 0.5% month-on-month and 3.2% year-on-year in March, accelerating from the 0.0% and 2.4% respective gains in February; consensus estimates were 0.2% and 2.9% respectively. On a quarterly annualized basis, GDP rose 3.7%, which was higher than the prior gain of 2.7% but less than the surveyed 4.2%.


  • The ECB is starting to debate whether to reflect the euro area’s improving economic prospects in its policy guidance, Bundesbank President Jens Weidmann said. He added that the strengthening recovery makes it increasingly likely that the rise in the inflation rate isn’t just “a flash in the pan”. Inflation would still accelerate more than in the previous years even if some of the stimulus were removed, he said, adding the ECB should consider the impact of its policies on bank profitability.
  • German retail sales in April slipped 0.9% from a year before, contracting from a 2.9% increase in March; economists had predicted a 0.3% rise.
  • French headline CPI in May rose 0.8% year-on-year, slowing from the 1.2% rise in April and less than the median estimate of 0.9%.
  • Eurozone CPI in May rose 1.4% from a year ago, at a slower pace compared to the 1.9% rise in April and less than the 1.5% consensus estimate.


  • The China Caixin manufacturing PMI slipped to contractionary territory, falling to 49.6 in May from 50.3 in April, and missing out on the median estimate of 50.1.


  • Retail sales in April gained 1.0%, reversing a 0.2% fall in March and exceeding the median estimate of a0.3% advance.

Precious Metals:

  • Spot gold pared some its overnight gains earlier this morning. The precious metal had risen 0.8% to a 1-month high of $1,274.17/Oz after Fed official Kaplan said he’s concerned about recent declines in the core measure of inflation.
  • From a technical analysis point-of-view, a golden cross formed last week, signalling further upside. A golden cross is formed when the 50-day moving average crosses above the 200-day moving average, and has only occurred 4 times in the past 5 years for gold and typically marks a multi-week trend.
  • Silver for immediate delivery was steady overnight; the metal has been consolidating around the $17.25/Oz and $17.50/Oz range over the past week.


  • Crude oil futures expiring in July rebounded 1.2% to $48.91/bbl earlier today, recovering from its lowest close in more than 2 weeks last night, where futures in New York closed 2.7% lower at $48.32/bbl.
  • US inventories fell by 8.7 million barrels last week, the American Petroleum Institute was said to report. Government data due tonight is forecast to report a slide of 3 million barrels, the eighth straight drop.
  • Output from Libya, exempt from OPEC’s deal to reduce supply, rose to the highest since October 2014 as production from its biggest field increased.


  • Spot 1.3842
  • USDSGD continues to be supported above the 1.3800 handle, climbing 0.2% to 1.3848 earlier today.
  • The resistance at 1.3918 remains. To the downside, a break below 1.3800 and the next level of 1.3725 may be tested soon.



  • Spot 0.7390
  • AUDUSD slumped 1.0% to 0.7385, its lowest level in more than 2 weeks, as the effects of stronger-than-expected Australian retail sales were outweighed by contractionary figures for the China Caixin manufacturing PMI.
  • AUDUSD gained by as much as 0.4% to 0.7476, following better-than-expected Chinese PMI data released earlier.



  • Spot 1.3505
  • USDCAD advanced 0.6% to 1.3523, after last night’s crude oil selloff pulled down the Canadian dollar.
  • The pair looks poised to register its largest daily gain since May 3, despite better-than-expected Canadian GDP numbers last night and a weakening US dollar this week.



  • Spot 6.7319
  • The PBOC strengthened its fixing earlier today by 0.79%, the most since January, to 6.8090 to a US dollar.
  • Offshore yuan gained 0.6% to 6.7234 against the dollar, while onshore yuan is poised for its biggest 4-day advance in almost 12 years, following a stronger-than-expected yuan fixing earlier and amid speculation Chinese policy makers are trying to discourage bets against the currency.



  • Spot 110.88
  • USDJPY declined back below the 111 handle, and was little changed heading into midday in Asia.
  • The 115 handle is expected to be a region of resistance, while the 200-day moving average of 110 is likely to provide support.



  • Spot 1.2879
  • GBPUSD gained by as much as 0.7% to 1.2921 overnight, before paring back below the 1.2900 handle earlier today as markets look forward to fresh impetus from the upcoming UK manufacturing PMI.
  • The key 1.2770 support level continues to hold strong.
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UEN: 201419754M

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