Daily Observations:

Asian stocks were mostly higher, following yesterday’s global equity market rally, together with commodities, on speculation Hillary Clinton’s chances of a US election victory increased after the FBI said her handling of emails wasn’t a crime. Demand for haven assets waned, as high-quality government bonds, the yen and gold hovered near their previous sessions’ lows.

US:

  • The US will vote tonight; the first state polls close at 8am SGT on Wednesday with results likely known by that afternoon.
  • Relief swept over markets around the world, on the eve of the vote, as FBI director James Comey said Sunday that the agency kept its July conclusion and wouldn’t recommend criminal charges against Clinton.
  • Clinton is leading Trump by three percentage points among likely voters nationally, the latest sign that her campaign’s painstaking focus on women, Latinos and blacks could help propel her to the White House. The final Bloomberg Politics poll shows Clinton ahead of Trump, 44% to 41%.
  • Speculation on Clinton’s chances helped boost odds of a Fed hike next month; according to Fed funds futures pricing on Bloomberg, there is an 82% chance of a rate hike in December, up from 76% last Friday.
  • The S&P 500 Index rallied 2.2%, erasing November’s losses, driven by broad gains in financials, industrials as well as health care stocks.
  • The US dollar strengthened broadly, with the Bloomberg Dollar Spot Index rising 0.4% in New York, reversing a six-day decline.
  • Treasuries led declines among high-quality sovereign bonds, as the benchmark 10yr yield rose 5bps to 1.82%.

UK:

  • Prime Minister Theresa May will probably reveal the outline of her Brexit plans for finance and other key industries within weeks, according to a report in the Financial Times.
  • In an interview with the BBC, May reiterated that she is sticking to her original deadline of end-March with regards to triggering Article 50. She added that her government is appealing against the High Court’s decision last week, and the final judgement will now be taken by the Supreme Court which should be done within weeks.

China:

  • China’s exports fell last month, adding to depreciation pressures on the yuan. Exports slipped 3.2% in yuan terms and 7.3% in dollar terms from a year earlier, missing estimates of -0.8% and -6.0% respectively. Imports rose 3.2% in yuan terms and slipped 1.4% in dollar terms over the same period, falling short of the expected 5.0% gain and 1.0% drop respectively.
  • A depreciation of about 9% in the yuan since Aug 2015 has cushioned the blow from tepid global demand, but failed to provide any sustained boost to shipments. Rising input costs and surging wages bills have flattened profit margins for exporters. Trade’s contribution to China’s economy continues to diminish as the country gets increasingly dependent on domestic demand.

Australia:

  • NAB’s October business survey saw its business confidence gauge fall by 2pts to 4, and its business conditions gauge fall to 6 from 8 in September.

Precious Metals:

  • Spot gold fell 0.8% to $1,278.23/Oz, extending upon its previous session’s 1.3% fall, and now sits just above its 200-day moving average.
  • For gold to maintain its upward momentum, staying above the 200-week moving average of $1,270/Oz will be key.
  • Spot silver declined 1.4% earlier in its session to test the $18/Oz support for the second time in less than a week. The metal has since pared losses back to near its intraday highs of $18.25/Oz.

Oil:

  • Crude oil for December delivery snapped a six-day losing streak, rising 1.9% to $44.89/bbl overnight. OPEC Secretary-General Mohammed Barkindo said Russia, the world’s biggest energy producer, is “on board” with an agreement to limit crude production.

 

USDSGD:

  • Spot 1.3910
  • USDSGD rose 0.2% to 1.3923 as the currency pair continues to be buoyed by increasing speculation of a Clinton victory in this week’s US elections.
  • According to Bloomberg, 10yr Singapore government yields could extend its advance towards the high of 2.14% on June 20 if the US election result solidifies the chances of a Fed rate-hike in December.
  • On a longer-term basis, the currency pair could find decent support at the 1.3800 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 0.7698
  • AUDUSD rose 0.7% earlier today to 0.7729, but retreated back below the 0.7700 handle following disappointing trade data from China.
  • The key resistance remains at 0.7835.

 

USDCAD:

  • Spot 1.3390
  • USDCAD continues to consolidate at the 1.3400 handle; the currency pair has been fluctuating around this level for almost 2 weeks.

 

USDCNH:

  • Spot 6.7908
  • The PBOC weakened its fixing to 6.7817 to the dollar, the weakest since 28th Oct.
  • USDCNH rose 0.2% to 6.7962 earlier this morning, the highest in a week.

 

USDJPY:

  • Spot 104.34
  • USDJPY added 0.1% to 104.62 last night following Monday’s 1.3% rally, but has since pared back some of its gains today.
  • According to Bloomberg, yen traders have become more bullish on the yen as the election nears, with JPMorgan Chase & Co. and HSBC Holdings Plc say the neither candidate will favor a stronger dollar with their respective protectionist policies and the yen is set to strengthen against the dollar over the longer term.

 

GBPUSD:

  • Spot 1.2398
  • GBPUSD declined 0.3% to 1.2379 today, following broad overnight USD strength and reports that May will reveal Brexit plans in weeks.
  • The 1.2100 handle remains a key support level, while 1.2800 acts as an important resistance handle.

 

© Jachin Capital Pte Ltd

UEN: 201419754M


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