Daily Observations:

Equities tumbled across Asia after the S&P 500 Index fell the most last night since Donald Trump’s presidential win, as reflation trades faltered amid uncertainty over prospects of Trump’s proposed policies. The yen, US Treasuries and gold gained as investors sought refuge in safe haven assets.


  • Top Republicans are warning their fellow party members that failing to repeal Obamacare could imperil the goal of a massive tax cut and perhaps more of President Donald Trump’s legislative agenda. Obstacles remain for the new health-care bill, even with House GOP leaders making a series of 11th hour changes to it Monday evening in a bid to secure more votes, there were still not enough votes to pass the legislation, Bloomberg news reported.
  • The S&P 500 Index declined 1.2%, the biggest drop since Oct. 11. The S&P 500 Index suffered its first decline of at least 1% under a Trump presidency following an overnight rout in financial shares. Banks had rallied 22% through Monday, double the S&P 500’s gain and 8% more than the next best group.
  • Trump’s ability to enact a rollback of regulations such as the Dodd-Frank Act is headed for a major test, as the outcome of the proposed repeal of Obamacare is in doubt. Investors are realising the difficulties in passing new legislation, and some doubts regarding the unification within the Trump administration and Republican Congress are beginning to creep in.
  • The US dollar weakened overnight, with the Dollar Index closing below the 100 psychological level for the first time since Feb. 6. The boarder Bloomberg Dollar Spot Index ended 0.3% lower. The greenback has since pared back some of its overnight weakness in Asia trade this morning, with the latter index recovering 0.1%.
  • Treasury yields continued to retreat post FOMC, as the benchmark 10yr Treasury yield declined 4bps to 2.42% in New York.
  • A growing number of Republicans are calling on US President Trump to retract his claim that he was wiretapped during last year’s election after FBI Director James Comey said there was no evidence to support that accusation.


  • Retail sales in January beat expectations, rising 2.2% month-on-month and 1.7% if automobile sales were excluded; analysts surveyed were expecting gains of 1.5% and 1.3% respectively.
  • Bank of Canada Deputy Governor Lawrence Schembri is warning people not to get ahead of themselves after a run of data showing an improving Canadian economy. He outlined reasons for caution, including struggles in exports, subdued wage growth, demographic forces and persistent economic slack in Canada.


  • Inflation last month surprised to the upside; headline inflation rose 0.7% month-on-month and 2.3% year-on-year, exceeding the median estimates of 0.5% and 2.1% respectively.


  • Exports in February rose for a third straight month, accelerating to 11.3% from a year earlier and beating the expected 10.1% rise. Imports gained 1.2%, slightly missing out on the forecasted 1.3%.
  • Trade surplus last month was 813 billion yen, higher than expected, and a result of a large jump in exports due to the Lunar New Year holiday; exports to China were up by 28%.


  • The PBOC injected hundreds of billions of yuan into the financial system after some smaller lenders failed to make debt payments in the interbank market, Bloomberg news reported. The institutions that missed payments included rural commercial banks, according to sources who requested anonymity.
  • Benchmark money market rates has risen to the highest level since April 2015, causing smaller lenders to face tighter liquidity, and reflecting a mix of technical factors including cash hoarding for quarter-end regulatory checks.

Precious Metals:

  • Spot gold jumped 1.3% to $1,247.65/Oz, its highest level in 3 weeks, amid a selloff in US stocks and the dollar last night.
  • Continued risk-off sentiment may keep safe-haven bids for the precious metal intact, with the next resistance region coming in around its 200-day moving average of $1,261/Oz.
  • To the downside, the support at $1,220/Oz should hold for the near-term.
  • Silver for immediate delivery gained as well, rising by as much as 1.1% to $17.6025/Oz earlier in its session.


  • Crude oil futures expiring in April closed 1.4% lower at $48.24/bbl, its lowest close since November.
  • US government data tonight is expected to show crude inventories increased by 4.53 million barrels last week.



  • Spot 1.4012
  • USDSGD advanced 0.4% back above the 1.4000 handle after failing to break below Monday’s low of 1.3956.
  • The next support below lies at 1.3903 – the pair’s 200-day moving average.



  • Spot 0.7660
  • AUDUSD sank 1.1% to 0.7651 earlier today amid risk aversion among investors as well as a retreat in iron ore and copper prices.
  • The 50-day moving average around the 0.7600 handle would be the nearest region of support.



  • Spot 1.3381
  • USDCAD has made a strong comeback, erasing earlier losses and gaining as much as 0.5% to 1.3387 on the back of a steadying US dollar which seems to have found some footing in Asia this morning.



  • Spot 6.8746
  • The PBOC earlier strengthened its daily reference rate to 6.8889 to the dollar, from 6.9071 yesterday.
  • USDCNH was mostly unchanged from its prior close, after paring earlier declines of 0.1%.



  • Spot 111.71
  • USDJPY fell 1.0% to 111.43 earlier today, its lowest level since last November, as investors sought refuge in safe haven assets.
  • A convincing break below the 111.60 support may result in further downside for the currency pair; a move lower to the 200-day moving average at around 108 could be in the offing.



  • Spot 1.2474
  • GBPUSD rose 0.2% to a 1-month high of 1.2494 last night on the back of stronger-than-expected inflation data in the UK, before paring gains in Asia trade today as US bulls fought back control. The currency pair has gained for 5 straight sessions prior to today.
  • With the 100-day moving average at 1.2400 broken, the momentum remains to the upside.


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