Daily Observations:

Asian equities were mixed earlier, while the yen strengthened amid geopolitical concerns in the region after a North Korea missile launch this morning. Gold was largely unchanged after rebounding off the $1,220/Oz support on Friday.


  • ISM non-manufacturing index in February rose to 57.6, from 56.5 prior, beating the consensus estimate of 56.5. Markit services PMI ticked slightly lower to 53.8, from 53.9, missing out on the 54.0 expected.
  • Fed Chair Janet Yellen said on Friday an interest-rate increase would “likely be appropriate” at the central bank’s upcoming meeting if employment and inflation continue to meet policy makers’ expectations.
  • Vice Chair Stanley Fischer said that a rate hike in Match is conscious and he stronger supports it.
  • The Fed will announce its policy decision on Mar. 15. A Mar. 10 employment report is the most significant data report standing between officials and decision day, and economists expect a solid 190,000 payrolls gain in February.
  • Markets are pricing in a 94% chance of a rate hike this month, up from just 40% a week ago, according to Bloomberg fed funds futures pricing data.
  • The US dollar maintained Friday’s declines earlier today; the Bloomberg Dollar Spot Index declined 0.7% last Friday after reaching a 1-month high.
  • The benchmark 10yr Treasury yield climbed to a high of 2.52% before retreating to 2.48% at its close to end up little changed after market participants realise that a March rate-hike possibility had been almost fully priced in.
  • US equities ended marginally higher; the S&P 500 Index gained 0.1%, as gains in health care and financial stocks offset declines in real estate and consumer staples shares.


  • Chinese leaders conveyed a message of stability as the National People’s Congress began on Sunday in Beijing. Central bank deputies Pan Gongsheng and Yi Gang emphasized that the currency market was steady, with Pan reinforcing that any yuan volatility would be “normal”, even if trading is affected in the short term.
  • Premier Li Keqiang set a 2017 growth target of “around 6.5%, or higher if possible” in a report to the NPC which reiterated the pursuit of neutral monetary policy this year.


  • Prime Minister Shinzo Abe told reporters the government will hold a National Security Council meeting today after North Korea launched 4 ballistic missiles this morning.
  • Chief Cabinet Secretary Suga said 3 of the missiles fell in Japan’s exclusive economic zone although there were no reports of damage so far.


  • Retail sales in January rose 0.4% month-on-month, reversing a 0.1% decline in the prior month and matching the median estimate.

Precious Metals:

  • Spot gold registered its fifth consecutive daily decline on Friday, ending 0.7% lower at $1,234.81/Oz and paring an initial decline of as much as 1.7% to $1,222.94/Oz.
  • The current support at $1,220/Oz remains key, as a fall back below it 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 2.0% last Friday and fell a further 0.7% earlier today to $17.8415/Oz.


  • Crude oil futures expiring in April pared some of its 1.4% rebound last Friday, falling 0.4% to $53.10/bbl earlier today. Friday’s rebound occurred after Libya halted exports from 2 of its biggest export terminals and reduced production from some oil fields after clashes amid security concerns.



  • Spot 1.4109
  • USDSGD on Friday pared gains of as much as 0.5% to 1.4169 to close the week at 1.4107. The pair was largely unchanged this morning.
  • The pair is in line to retest the 100-day moving average at around 1.4200, last broken more than a week ago.



  • Spot 0.7576
  • AUDUSD slipped 0.3% to 0.7571 earlier today, and looks on course to register its fifth straight day of declines.
  • The pair fell to a 1-month low of 0.7543 last Friday, and looks set test the key 0.7500 support over the near term.



  • Spot 1.3394
  • USDCAD is threatening to break beyond its 1.3400 resistance level, after edging 0.1% higher to 1.3398 earlier today.
  • The pair had gained to a high of 1.3437 on Friday, before a US dollar sell-off and stronger crude oil prices sent the currency pair back below 1.3400.
  • After 1.3400, the next resistance target is at 1.3600.



  • Spot 6.8923
  • The PBOC earlier strengthened its daily reference rate by 0.15% at 6.8790, from 6.8896 to the dollar the day before.
  • USDCNH fell 0.1% to 6.8874, and looks set to snap a 3-day winning streak. The currency pair on Friday briefly traded above the key 6.9000 handle, reaching a high of 6.9076.



  • Spot 113.82
  • USDJPY slid 0.3% to 113.72, following heightened geopolitical tensions in the region after a North Korea missile launch earlier today.



  • Spot 1.2286
  • GBPUSD was little changed earlier today, following the pair’s rebound off a 6-week low of 1.2215 on Friday.
  • Following a break below the February-low of 1.2350 last 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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