Daily Observations:
The US dollar weakened versus all of its major peers and Asian stocks were mostly lower as a tightening race for the US presidency deterred investors from taking risks ahead of the vote next week. Safe haven assets such as the Japanese yen and gold maintained gains.
US:
- Last week’s ADP employment changed numbers came in at 147,000, less than the 165,000 expected, although the prior figure was revised higher to 202,000.
- The Fed kept monetary policy unchanged, as expected, Market reaction to the Fed’s decision was relatively muted, even as policy makers kept the option for a hike by year-end open and reiterated that the argument for higher borrowing costs strengthened further amid accelerating inflation.
- In its statement, the central bank said the pace of price gains “has increased somewhat since earlier this year” and that market-based measures of inflation compensation “have moved up”. The committee also omitted previous language saying inflation would probably “remain low in the near term”.
- Much focus remains on the US presidential election, as Clinton’s polling lead over Trump continues to shrink. According to a Bloomberg poll, almost half of her voters said renewed scrutiny of her emails won’t impact their decision. Furthermore, voters who don’t identify with either party represented 29% of the electorate in the last election and now back Clinton over Trump 39% to 35% in a head-to-head contest.
- The S&P 500 Index fell 0.7% to reach its lowest since 11th July and dropping for the seventh straight day.
- Treasury yields remained lower, with the benchmark 10yr yield falling 3bps to 1.80% as market participants shrugged off the Fed’s decision overnight and chose to remain focused on the presidential election.
- The US dollar weakened together with Treasury yields, with the Bloomberg Dollar Spot Index falling 0.2% in New York and a further 0.3% this morning.
UK:
- The BOE is expected to keep rates on hold at 0.25% later today, following better-than-expected economic growth in the months since the EU referendum.
China:
- October’s Caixin services and composite PMI came in at 52.4 and 52.9 respectively, both improving upon prior readings of 52.0 and 51.4.
Australia:
- In an interview with Bloomberg, ANZ CEO Shane Elliot says the banks sees home-price growth to slow over the next 12-18 months.
Singapore:
- October PMI fell to 50.0, from 50.1 in September, missing the expected reading of 50.2. The Electronics Sector Index rose to 50.8 from 50.3.
- Nikkei PMI last month fell to 50.5, from 52.9 prior; softer growth in business activities contributed to companies becoming more cautious with regard to employment and inventories, IHS Markit, which compiles the survey, said.
Precious Metals:
- Spot gold gained 1.0% to an overnight high of $1,308.02/Oz, but has since retreated back to the $1,300/Oz handle. Gold for immediate delivery has gained for 3 consecutive days following increased nervousness over a Trump presidential election win.
- Spot silver rose 1.3% to $18.7415/Oz, gaining above the resistance level of $18.5000/Oz.
Oil:
- Crude oil for December delivery bounced off the $45/bbl handle and was 1.2% higher at $45.90/bbl earlier today. Oil slid to its lowest level in more than a month yesterday following data which showed US crude stockpiles last week rose 3.1% to 14.4 million barrels, the biggest gain since 1982, dwarfing the 2 million gain expected by analysts.
USDSGD:
- Spot 1.3841
- USDSGD fell 0.3% to a 2 week-low of 1.3819 following further USD weakness overnight.
- On a longer-term basis, the currency pair could find decent support at the 1.3850 level and some resistance at the 1.4000 psychological handle. A 1.4200 target remains a realistic possibility over the next 12 months.
AUDUSD:
- Spot 0.7663
- AUDUSD is currently fluctuating within its previous day’s range; the currency pair fell 0.2% to an intra-day low of 0.7637 earlier but has since recovered back higher.
- AUDUSD has made a series of lower highs over the past 2 weeks; the recent low of 0.7558 is worth monitoring closely.
USDCAD:
- Spot 1.3380
- USDCAD, continues to trade in a tight range around the 1.3400 resistance handle, and remains hardly changed for the fourth straight day.
- The effects of recent USD weakness have been offset by weaker crude oil prices, which explains the lack of direction in the Canadian dollar over the past few days.
USDCNH:
- Spot 6.7701
- USDCNH declined 0.1% to a 2 week-high of 6.7632 earlier in the session before paring losses; the recent decline in USD has eased depreciation pressures that drove the yuan to multiyear lows last month.
USDJPY:
- Spot 102.62
- USDJPY tumbled 0.8% to 102.55, extending upon the previous day’s 1.5% drop.
- The demand for yen as a safe haven has increased in recent days amid growing uncertainty over the outcome of the US presidential election.
GBPUSD:
- Spot 1.2333
- The pound strengthened to a 3 week-high, rising 0.6% to 1.2354 against the dollar mainly on the back of dollar weakness.
- The 1.2100 handle remains a key support level.