Daily Observations:

Most Asian equities followed US stocks into the red earlier today, following an overnight selloff in crude oil, as well as a decline in Treasuries after a stronger-than-expected US private jobs report. Chinese producer prices last month rose at the fastest pace since the Beijing Olympics, further lifting the outlook for global reflation. Gold declined, nearing the $1,200/Oz handle.


  • ADP employment change in February surpassed expectations, coming in at a 298,000. This was higher than the prior month’s increase of 261,000, which was revised higher; analysts surveyed had predicted a rise of 187,000.
  • Wholesale inventories slipped 0.2% from a month earlier, more than the 0.1% drop predicted.
  • Treasuries slumped, with implied odds of a March rate-hike according to Bloomberg pricing data now at 100%. The benchmark 10yr Treasury yield rose 4bps to 2.56%, its highest level since December.
  • The US dollar broadly rallied, as the Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, ending 0.4% higher in New York.
  • The S&P 500 Index slid 0.2% as energy producers fell more than 2.5% to lead all decliners.
  • According to Bill Gross, the benchmark 10yr Treasury yield is approaching the key 2.6% level, a level which according to the bond-market veteran at Janus Capital Management, gets breached, will signal the start of a bear market for bonds.


  • US Commerce Secretary Wilbur Ross said the US probably won’t begin “real” negotiations to revamp the North American Free Trade Agreement until later this year.


  • ECB President Mario Draghi and his Governing Council will announce their policy decision later today, and is widely expected to keep rates unchanged and reiterate the central bank’s monthly bond-buying program will run until at least December, slowing to 60 billion euros in April from the current 80 billion euros.
  • The ECB is also expected to revise its inflation projections for 2017 sharply higher, although the rate should stabilize in the subsequent 2 years as domestic price pressures offset fading energy effects, according to euro-area officials familiar with the matter, Bloomberg reported.


  • In his delivery of the Spring Budget on Wednesday, UK Chancellor of the Exchequer Philip Hammond reported an improved outlook, raising 2017 growth forecast to 2% from 1.4% and cut almost 17 billion pounds from estimated borrowing in the current fiscal. But there was no easing of the austerity push that is set to continue well beyond 2020, with new spending commitments financed by increasing taxes rather than borrowing.


  • PPI in February rose 7.8% from a year earlier, accelerating from a 6.9% gain in the month prior and exceeding the median estimate of 7.7%; this was the fastest pace since 2008, further lifting the outlook for global reflation.
  • CPI over the same period, gained 0.8% year-on-year, less than the 1.7% rise expected by analysts; it is worth noting though that the timing of the Lunar New Year holidays this year skewed the reading.


  • Australia’s benchmark yields climbed to a 15-month high amid speculation the central bank may start to raise the policy rate and as Treasury yields surged overnight following a better-than-expected US private jobs report.
  • The RBA had left its policy rate unchanged on Tuesday and Governor Phillip Lowe said housing market conditions are strong in some parts of the country and prices are rising “briskly”.


  • In its Recent Economic Developments report, MAS said that essential services segments, such as education and healthcare, are expected to remain stable, but cyclically-sensitive activities such as construction and retail are likely to be comparatively weaker. The report further added that construction will continue to be driven by public projects, while retail may be weighed down by a softening labor market and subdued consumer sentiments.

Precious Metals:

  • Spot gold extended losses earlier today, falling a further 0.5% to $1,205.99/Oz and is set to register its ninth consecutive daily decline.
  • With the $1,220/Oz level breached, the next bastion of support lies at $1,180/Oz, last reached at the end of January.
  • With a March hike fully priced in, gold investors will be keeping an eye out for further clues on the trajectory path of future rate hikes.
  • Silver for immediate delivery mirrored gold’s drop, falling by as much as 1.2% to $17.2057/Oz.


  • Crude oil futures expiring in April slumped 5.4% to $50.28/bbl in New York, its lowest level in 2017, after the Energy Information Administration reported that stockpiles rose 8.2 million barrels to 528.4 million, the highest since 1982.
  • Saudi Arabia Oil Minister Khalid Al-Falih said this week global inventories are falling slower than OPEC and its partners expected, opening the door to extend a deal to trim output beyond its initial 6 months.



  • Spot 1.4178
  • USDSGD rose 0.3% to 1.4189 earlier today following an overnight rally in the US dollar.
  • The pair is likely to test its 100-day moving average at 1.4200 soon.
  • In a recent note to clients, Credit Suisse expects USDSGD to reach 1.4500 in 3 months, and 1.4800 in 12 months, citing the Fed’s likelihood to raise rates 3 times this year as the main driving factor of the currency pair. The bank also doesn’t expect MAS to ease at its next meeting in April as concerns over deflation and a hard landing in China have ebbed.



  • Spot 0.7517
  • AUDUSD resumed its declines from its high since end-February, falling 0.6% to 0.7514 earlier today, nearing its key support level at 0.7500.



  • Spot 1.3493
  • USDCAD jumped 0.5% to 1.3500, driven on by a stronger US dollar and slumping oil prices overnight, to hit a fresh 2017-high for the currency pair.
  • The 1.3600 resistance level is next in line to be tested.



  • Spot 6.8978
  • The PBOC earlier weakened its daily reference rate by 0.13% to 6.9125, from 6.9032 to the dollar the day before.
  • USDCNH rose 0.2% to 6.9291, gaining beyond the key 6.9000 resistance level in the process.



  • Spot 114.46
  • USDJPY gained 0.6% to 114.75, nearing a 1-month high of 114.96.
  • A positive jobs report on Friday could propel the currency pair past its 115 resistance.
  • Based on Tokyo Financial Exchange data, Japanese retail investors increased their overall net yen short positions by the most since June last year, amid increasing indications that the Fed will raise rates later this month.



  • Spot 1.2159
  • GBPUSD declined to a fresh 7-week low last night, falling to 1.2139 before paring declines in Asia earlier today.
  • It is getting increasingly likely the currency pair will test the key 1.2000 again over the near-to-medium term.
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UEN: 201419754M

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