Daily Observations:

The US dollar recovered earlier today as Treasury yields halted a 4-day decline ahead of the US Congress vote on health-care reform tonight that could pose a setback for President Donald Trump’s agenda if the bill was rejected. Asian equities recovered, while demand for haven assets eased, resulting in weakness in the yen and gold.


  • Thursday’s health care vote has been branded a “key litmus test” for the Trump administration, according to some analysts. A House divided over the repeal and replacement of Obamacare faces an uphill battle, and failure to reform could raise further questions regarding the Trump administration’s ability to accomplish other tax, economic and regulatory reforms.
  • Such uncertainty, may extend Tuesday’s sell-off which pushed the S&P 500 lower by more than 1% for the first time since Oct. 11 last year. On the flip-side, if the bill is passed, a relief rally could take place as it frees up the administration to focus on pro-growth policies and more importantly, prevent further erosion of Trump’s credibility.
  • US stocks edged higher Wednesday, with the S&P 500 Index gaining 0.2% and the Nasdaq Composite rising 0.5%; the Dow Jones Industrial Average was almost unchanged. Gains in technology shares led the way, offsetting losses in telecommunications stocks.
  • The US dollar was slightly stronger at Asia’s market open earlier today, the Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, was 0.1% higher, after falling for 6 straight sessions.
  • US yields fell yet again, as the benchmark 10yr Treasury yield ended 1bp lower at 2.41%, recovering at the close from a decline of as much as 5bps earlier in the session.
  • In an 81-page paper released by Bridgewater Associates, billionaire investor Ray Dalio warned that global populism will be an economic force more powerful than monetary and fiscal policies over the next year.


  • Canada’s federal government will issue a record C$142 billion of bonds next fiscal year to finance its growing budget deficit, eclipsing the previous year’s record of C$125 billion.
  • The government is picking 6 industrial sectors, led by clean technology, to foster innovation and jobs in an economy that’s been relying on commodities to drive growth. Support will be focused on clean tech, agri-good, digital, advanced manufacturing, bio-sciences and clean resources, according to Prime Minister Justin Trudeau’s second budget released in Ottawa yesterday.


  • London’s worst terror attack in more than a decade left 5 people dead, including the assailant and the police officer he stabbed, and at least 40 injured. The attack shut down Parliament, leaving hundreds of lawmakers and workers in lockdown for several hours.
  • Authorities are working on the assumption the attack was “Islamist related terrorism”, according to head of counter-terrorism policing Mark Rowley.


  • Economists surveyed by Bloomberg have upgraded their forecasts for China’s economic growth in each quarter of this year and expect inflation to remain well under the government’s ceiling. They are also projecting the PBOC to keep banks’ reserve requirement ratio unchanged throughout the year, versus a previous forecast for a reduction in the fourth quarter.

Precious Metals:

  • Spot gold briefly traded above the $1,250/Oz handle, before erasing all of its overnight gains. The precious metal was 0.1% lower at $1,244.41 earlier as a selloff in global equities eased, damping demand for haven assets.
  • Fed Chair Janet Yellen is due to speak tonight and any hawkish overtones could further dampen the demand for the yellow metal, which has risen almost 4% over the past week.
  • To the upside, the next resistance region to be tested lies around the 200-day moving average of $1,261/Oz.
  • Lower below, the support at $1,220/Oz should hold for the near-term.
  • Silver for immediate delivery flirted with a 2-week high, after rising by as much as 0.5% to $17.5833 overnight.


  • Crude oil futures expiring in May was 0.8% higher at $48.44/bbl earlier today, reversing all of its previous session’s decline which also saw futures reach a 4-month low of $47.01/bbl.
  • Gasoline stockpiles slid a fifth week to the lowest since January and distillates dropped a sixth week to the least since December, according to government data Wednesday, bolstering speculation that refiners will boost oil purchases and reduce US crude supplies.



  • Spot 1.3998
  • The Singapore dollar weakened earlier today ahead of February inflation data due later which is expected to show that core CPI grew at a slower pace.
  • USDSGD erased earlier declines of 0.2% to 1.3971, reverting back to the round 1.4000 handle, largely unchanged from its previous session’s close.



  • Spot 0.7655
  • AUDUSD was relatively unchanged, after erasing a 0.4% rise which saw the currency reach 0.7685 last night.
  • Renewed US dollar strength could drive the currency pair lower to the 0.7600 support region.



  • Spot 1.3329
  • USDCAD retraced from the 1.3400 handle, falling 0.6% to 1.3321 this morning. Future moves in the currency pair looks unlikely until either one of the 1.3400 or 1.3300 levels is broken convincingly.



  • Spot 6.8730
  • The PBOC earlier strengthened its daily reference rate to 6.8856 to the dollar, the highest level since Mar.6, from 6.8889 yesterday.
  • USDCNH gained 0.1% to 6.8754, as the currency pair continues to be supported above its 50-day moving average around 6.8600.
  • USDCNH was mostly unchanged from its prior close, after paring earlier declines of 0.1%.



  • Spot 111.38
  • The yen fell below the 111 handle, declining 0.5% to 110.73 overnight, before a risk rally in Asia this morning saw the safe-haven currency erase all of its gains.
  • USDJPY reversed to 111.58, or 0.3% higher earlier today, following its previous session’s 1.1% drop.
  • 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 1.2485
  • GBPUSD looks set to retest the 1.2500 handle again soon, after rising 0.3% to 1.2490 earlier.
  • A surge in inflation report by the UK ONS earlier this week saw the pair jump from 1.2340 to 1.2506, however subsequent shift in the market sentiment – from risk-on to risk-off restricted further gains.
  • With the 100-day moving average at 1.2400 broken, the momentum remains to the upside.


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UEN: 201419754M

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