Daily Observations:

Asian equities reversed yesterday’s gains, following US stocks into the red, ahead of Fed Chair Yellen’s speech on the economy tonight. The dollar rallied overnight but pared some of its gains in Asia this morning. Oil and gold maintained near lows following overnight declines.


  • Initial jobless claims for the week ended Feb. 25 fell to 223,000, from 242,000 prior, better than the consensus estimate of a rise to 245,000. The 4-week moving average declined to 234,250, the lowest level since April 1973.
  • Fed Chair Janet Yellen is set to give a speech on the economy in Chicago tonight, and is expected to give an update on progress toward the Fed’s goals of full employment and stable prices. Depending on how Yellen balances her comments, she could set up a March rate-hike increase, as many of her colleagues have done so in the past week, or rein in market expectations which currently place odds of a rate-increase this month at about 90%.
  • Fed Governor Jerome Powell, in an interview with CNBC, said the case for a March hike has come together as the economy maintains solid momentum, inflation draws close to the 2% target, and fiscal policy tilts growth risks to the upside. Powell said he still supports 3 rate hikes this year.
  • US stocks capped the worst day since January as the bullish tone on global financial markets evaporated; the S&P 500 Index fell 0.6%, paring gains from the previous day which saw equities reach fresh record highs. Financials led decliners.
  • The US dollar soared together with odds of a rate hike this month, which rose to 90%. The Bloomberg Dollar Spot Index added 0.5% to a 1-month high.
  • The benchmark US Treasury 10yr yield briefly traded above 2.50% for the first time since Feb. 14, and eventually closed 3bps higher at 2.48%.


  • GDP in December last year expanded 0.3% month-on-month and 2.0% year-on-year, matching estimates for the former and beating expectations of a 1.7% rise for the latter. November’s figures were revised upwards as well.
  • On a quarterly annualized basis, 4Q GDP grew 2.6%, more than the 2.0% forecasted but at a slower pace compared to the upwardly-revised 3.8% in the previous quarter.
  • Growth was driven by a sharp drop in imports, as well as continued strength in household spending.


  • French presidential candidate Francois Fillon’s campaign woes deepened after more than 60 politicians said they no longer could support a candidate facing charges for the alleged embezzlement of public funds, intensifying the exodus of elected officials from his own party. Police had searched Fillon’s home on Thursday as part of its probe into the alleged fictitious jobs held by his wife and children.


  • Prime Minister Theresa May’s plan to get the economy “firing” lacks a clear long-term strategy and risks failing to spread prosperity, according to a cross-party panel of lawmakers.
  • The panel agreed that the industrial strategy, previously announced in January, needs more clarity on steps to intervene in foreign takeovers, in reference to Kraft Heinz Co.’s aborted bid for Unilever Plc.
  • The panel also called for a clear target for spending on research and development, a greater emphasis on improving skills and an overhaul of taxes on commercial properties known as business rates.


  • Caixin’s China PMI Composite in February rose to 52.6 from 52.2, while PMI Services slid to 52.6 from 53.1.
  • The annual session of the government’s top advisory body, the Chinese People’s Political Consultative Conference, opens in Beijing today.


  • The jobless rate in January ticked lower to 3.0% from 3.1% in February, lower than the 3.0% expected.
  • Headline January CPI rose 0.4% from a year earlier, matching expectations and accelerating from the prior increase of 0.3%. Stripped of the effects of fresh food, CPI gained 0.1% year-on-year, beating the consensus estimate of 0.0% and rising for the first time since Dec 2015.


  • February PMI slipped to 50.9, from 51.0 in January, slightly worse than the median estimate of 51.0. The electronic sector index declined to 51.4 from 51.8.
  • The Nikkei Singapore PMI last month fell to 51.4 from 51.6 in the month prior.

Precious Metals:

  • Spot gold slumped 1.0% earlier today to $1,231.06/Oz, and looks odds on to fall for the fifth straight day and only its second weekly decline in 2017, after traders priced in higher expectations of a March rate-hike.
  • A fall back below $1,220/Oz could signal that the rally gold experienced since end-December might be a correction of a larger downtrend instead, which could potentially lead to a decline back to the lows around $1,130/Oz.
  • Silver for immediate delivery sank 3.6% to $17.6845/Oz, failing to hold above its 200-day moving average at around $19/Oz.


  • Crude oil futures expiring in April fell to a 3-week low, ending 2.3% lower at $52.61/bbl in New York on concern that record US inventories and rising production will offset efforts by OPEC to balance a global oversupply.
  • US stockpiles expanded to the most in weekly government data going back to 1982, while output increased to the highest in almost a year. Saudi Arabia continued to lead OPEC’s effort to cut production by lowering oil supply by 90,000 bpd from a month earlier to 9.78 million bpd in February, according to a Bloomberg survey.



  • Spot 1.4145
  • USDSGD extended its recent rebound off the 1.4000 support, gaining 0.4% to 1.4147 earlier today.
  • The Singapore dollar continues to be depressed relative to the greenback on growing expectations that the Fed will raise rates this month.
  • The pair is line to retest the 100-day moving average at around 1.4200, last broken a week ago.



  • Spot 0.7547
  • AUDUSD slumped 1.0% to 0.7543, its biggest single-day drop since Nov. 9 last year.
  • The currency pair is likely to reach the key 0.7500 support over the near term.



  • Spot 1.3392
  • USDCAD extended its recent rally into Asia morning, adding 0.3% to 1.3402, reaching a key resistance level. Continued rising expectations of a March rate-hike by the Fed, coupled with weaker crude oil prices overnight, provided tailwinds for the currency pair’s rise after 1.3400 lies at 1.3600.



  • Spot 6.8946
  • The PBOC earlier set its daily reference rate lower by 0.35% at 6.8896, from 6.8809 to the dollar the day before.
  • USDCNH climbed 0.3% to 6.8973 earlier today, and is poised for its largest weekly gain since December.



  • Spot 114.14
  • USDJPY reversed an overnight gain which saw the pair rise to 114.59, and was 0.1% lower at 114.12 earlier today.
  • USDJPY edged above the 114 handle for the first time in 2 weeks yesterday.



  • Spot 1.2272
  • Following a 0.8% decline in its previous session, GBPUSD reached a fresh 1-month low of 1.2243 last night before paring losses earlier this morning.
  • Following a break below the February-low of 1.2350 on Thursday, the pair may continue to fall lower to around 1.2100 – 1.2200 levels.
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UEN: 201419754M

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