The dollar and US index futures extended Friday’s declines, while gold climbed with bonds as investors shunned risk assets amid increased scepticism of US President Donald Trump’s ability to implement his economic agenda last week’s failed US health-care deal. Most Asian equities fell.
- Durable goods orders in February gained 1.7%, more than the median consensus of 1.4% while the prior gain of 2.0% was revised upwards to 2.3%. Ex-transportation, durable goods fared worse, rising 0.4% instead of the 0.6% predicted.
- The Markit manufacturing PMI for March came in at 53.4, falling from 54.2 in February and worse than the expected 54.8 reading. Services PMI fell to 52.9, from 53.8 prior, falling short of the 54.0 expected.
- US equities posted its worst weekly slide last Friday since the election as President Donald Trump suffered a major setback when he was forced to pull his health-care bill from a vote amid dissent among congressional Republicans. Both conservatives and moderates opposed the bill even after Trump met personally with scores of lawmakers and travelled to Capitol Hill on Tuesday to address House Republicans. The setback has casted doubt on Trump’s ability to shepherd in other parts of his agenda, including promised tax cuts and regulatory reform through Congress.
- The S&P 500 Index fell 0.1%, paring losses towards the close following an earlier decline of as much as 0.4%. Shares in the materials sector led losers.
- The US dollar continued its slide this morning, with the Bloomberg Dollar Spot Index gapping down by as much as 0.4% earlier. The Dollar Index is currently approaching a key support region which has held strongly since the presidential elections last November. A convincing break below it may drive the dollar gauge to retest the base of its uptrend line around the 98 handle.
- Yields retreated further, with the benchmark 10yr Treasury yield falling 5bps to 2.36% earlier today, its lowest level in a month.
- Headline inflation rose 2.0% from a year earlier, slightly missing out on the 2.1% expected, and gained 0.2% from a month ago, in line with expectations.
- Prime Minister Theresa May is set to meet Scottish First Minister Nicola Sturgeon today, in a bid to make a case for unity before she triggers Article 50.
- China industrial profits surged 31.5% in January and February combined from a year earlier, the National Bureau of Statistics reported, as producer prices rebound.
- Industrial production in February rose 12.6% year-on-year, but declined 3.7% on a seasonally adjusted month-on-month basis; the former beat the consensus estimate 10.0% while the latter missed expectations of a 1.2% rise.
- Spot gold rallied earlier today, gaining 1.2% to a one-month high of $1,258.19/Oz. The precious metal is likely to test its 200-day moving average around the $1,261/Oz handle, as investors try to hedge against uncertainties over Trump’s policies.
- To the downside, the support at $1,220/Oz should hold for the near-term.
- Silver for immediate delivery gained as well, adding 0.7% to $17.8928/Oz.
- Crude oil futures expiring in May ended 0.6% higher Friday, but erased most of it earlier today after falling by as much as 0.5% to $47.75/bbl.
- 5 OPEC members and Oman backed an extension, with Kuwait saying it should be for 6 months, as ministers met over the weekend to assess output cuts. The committee released a statement asking OPEC to review the market and give them a recommendation in April on rolling over the cuts.
- Russia has said it’s too early to talk about an extension and that it won’t make any pledges until April.
- Spot 1.3953
- USDSGD declined 0.3% to 1.3949, a fresh 4-month low, as fresh US dollar weakness was the main theme in Asia earlier today after the US withdrawal of health-care last Friday.
- Further downward momentum may push the pair lower to its 200-day moving average of 1.3912, last crossed in early October.
- Following last week’s inflation report, Bloomberg Intelligence wrote that inflation and growth in Singapore still remain well below trend while the risks to demand remains significant, suggesting the MAS may leave policy settings unchanged when it meets in April.
- Spot 0.7627
- AUDUSD found some footing above the 0.7600 handle, and was little changed this morning following last week’s 1.1% declined.
- A weakness in iron ore prices today has helped negate the effects of a weaker US dollar.
- Spot 1.3329
- USDCAD erased Friday’s advance, retreating 0.4% to 1.3324 earlier.
- The currency pair continues to be bound by its 1.3300 and 1.3400 handles.
- Spot 6.8583
- The PBOC strengthened its daily reference rate by 0.21% to 6.8701 to the dollar, the strongest level in a month, from 6.8845 on Friday.
- USDCNH fell 0.3% to a session-low of 6.8531; a clean break below the key 6.8459 support may lead to further downside for the currency pair, with the next key support coming in around 6.8000.
- Spot 110.32
- USDJPY resumed its downward decline, falling 1.0% to 110.26 earlier, as a reassessment on the likelihood of pro-growth policies in the US after the failure of the health-care bill last week, and a series of domestic and technical factors have combined to reignite buying interest in the yen.
- The risk for USDJPY continues to remain to the downside, after the pair closed below the key 111.60 support last week. The currency pair had spent most of the past months within the 111.60 – 115.60 range, and following a breakout of its lower boundary, could fall further to its 200-day moving average of around 108 over the medium term.
- Spot 1.2530
- GBPUSD jumped 0.5% to a session-high of 1.2533 amid broad US dollar selling today.
- With the 100-day moving average at 1.2400 broken last week, the momentum remains to the upside. The next resistance comes in at 200-day moving average of 1.2702.