Daily Observations:

Asian equities were mixed as stocks in Singapore, Sydney and Tokyo fell, while those in Shanghai, Seoul, Hong Kong and Kuala Lumpur rose. The US dollar strengthened to erase an overnight decline, while gold tumbled back below the $1,230/Oz handle.


  • FBI Director James Comey confirmed his agency is investigating Russian meddling in last year’s US presidential election and that includes potential ties to associates of Donald Trump’s campaign. He also rejected repeated allegations that former President Barack Obama had Trump Tower wiretapped last year.
  • Chicago Fed President Charles Evans said 2 or 3 hikes might be warranted this year if economic data remains robust, in an interview on Fox news. His colleague, Philadelphia Fed chief Patrick Harker, said he expects inflation to overshoot the central bank’s 2% target by “a little bit”, underscoring his view of 3 hikes in 2017.
  • The US dollar weakened overnight, despite paring some of its weakness towards markets’ close; the Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, pared a drop of as much as 0.3% to end 0.1% lower in New York. The gauge was 0.1% lower in Asia trade earlier today.
  • Treasury yields edged lower; the benchmark 10yr Treasury yield fell below the 2.50% mark, ending 4bps lower at 2.46%.
  • US equities capped a third straight session of losses, with the benchmark S&P 500 Index declining 0.2%; declines by shares in the financials and utilities sectors led losers.


  • Finance Minister Bill Morneau said he remains committed to the notion a falling level of debt relative to the total size of the economy shows fiscal prudence, signalling the government won’t push much deeper into deficit when it delivers its budget later this week. The country’s low growth, along with new spending on infrastructure and transfer payments, has forced the government to abandon other fiscal pledges.
  • Canada’s economy has improved of late, posting its best growth since 2013 in the second half of last year. However, exports have been disappointing and business investment remains muted on concern the US will impose border taxes. Meanwhile, low borrowing costs have fuelled risks of a housing bubble in some cities.


  • Prime Minister Theresa May will file divorce papers to leave the EU on Mar. 29, launching 2 years of complex negotiations that will put the UK’s desire for a trade deal against the bloc’s view that Britain must not benefit from Brexit. The EU is already planning to focus the early part of talks on the exit fee – estimated as high as 60 billion euros, and May has been told she won’t be allowed to “cherry-pick” the best bits of EU membership without bearing the costs.
  • May will soon be working against the clock as she has until the end of 2018 to agree the terms of the breakup and try to win the trade deal she wants. If no agreement is reached, Britain will crash out of the EU and over what businesses call a “cliff edge” of uncertainty and higher trade tariffs.


  • French presidential front-runners Marine Le Pen and Emmanuel Macron repeatedly locked horns in a debate earlier today, providing a foreshadow of the head-to-head fight they may face in the second round of voting about 7 weeks away.
  • In a snap Elabe poll of 1,157 adults who watched the debate, Macron was seen as the most convincing by 29%, with far-left candidate Jean-Luc Melechon placing second with a score of 20%. Fillon and Le Pen were convincing only to 19% of those surveyed.


  • In its minutes of this month’s meeting released earlier today, the RBA highlighted threats in the property market and an acceleration of domestic household debt even as it lent credence to the global reflation story.
  • The RBA’s warning comes as the economic divide in Australia sharpens with house prices more than doubling in Sydney since 2009 and Melbourne’s similarly surging as investors tap cheap money. Meanwhile in the west, amid an unwinding of the mining-investment boom, property prices are falling and businesses are going bust as demand weakens.

Precious Metals:

  • Spot gold erased previous day’s gains, falling 0.5% to $1,227.73/Oz earlier today, ahead of a handful of Fed officials, including Fed Chair Janet Yellen, due to speak this week.
  • To the downside, the support at $1,220/Oz should hold for the near-term.
  • Silver for immediate delivery declined earlier today as well, falling 0.5% to $17.3372/Oz.


  • Crude oil futures expiring in April fell 1.2% in New York overnight, but gained 0.4% in Asia this morning to $48.42/bbl, rebounding off the $48/bbl handle in the process.
  • US stockpiles is expected to have increased by 3 million barrels last week, according to a Bloomberg survey before a report from the Energy Information Administration due Wednesday.
  • Libya’s major oil ports of Es Sider and Ras Lanuf are resuming operations and preparing to export crude after a 2-week halt in shipments due to military clashes.



  • Spot 1.3991
  • USDSGD reached a fresh 4-month low last night of 1.3956, before reversing losses. The currency pair was 0.1% higher at 1.3991 earlier today.
  • The next support below lies at 1.3903 – the pair’s 200-day moving average.



  • Spot 0.7709
  • AUDUSD erased most of Monday’s gains, retreating 0.3% to 0.7708 earlier today.
  • The currency pair had ended its previous session at 0.7728, its highest close since end-April last year.
  • Prior to today, AUDUSD had regained some bullish momentum following a correction earlier this month. Further weakness from the US dollar could result in the pair testing 2016 highs around the 0.7800 handle.



  • Spot 1.3347
  • USDCAD was largely unchanged earlier today; the currency pair seems to be undergoing some consolidation between the 1.3300 and 1.3400 handles.
  • A decline back to 1.3200 may materialise if US dollar or crude oil weaknesses resurface.



  • Spot 6.8951
  • The PBOC earlier weakened its daily reference rate by to 6.9071 to the dollar, from 6.8998 yesterday.
  • USDCNH was mostly unchanged, paring earlier declines of 0.1%.



  • Spot 112.71
  • USDJPY was relatively unchanged earlier today, after paring a decline of as much as 0.4% overnight.
  • The pair may have found some footing above its 112 handle, and could be poised for some recovery after declining around 2% in a week.



  • Spot 1.2363
  • GBPUSD fell by as much as 0.7% to 1.2335 last night, although the pair has since pared some of its losses earlier today and looks set to test the 1.2400 handle again.
  • Not much movement in the currency pair is expected though, until after UK inflation data due for release later today, which will scrutinized given its potential impact on monetary policy.


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UEN: 201419754M

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