November 9, 2016

Daily Observations:

Global markets were thrown into disarray as early results from the US election raised the possibility that Donald Trump will prevail over Hillary Clinton in the race for the presidency, shocking traders who had focused on polls in recent days showing the opposite. All Asian equities were broadly lower, together with EM currencies and oil, while safe haven assets such as gold, the yen and the Swiss franc.

US:

  • All eyes are currently on the US election votes result this morning, with the markets experiencing a high amount of volatility due to a presidential race that is still too close to call and tighter than most expected to be.
  • The S&P 500 Index closed last night 0.4% higher as early projections favoured a victory for Democratic candidate Hillary Clinton, with defensive utilities leading gainers. Index futures sank broadly in Asian trade this morning though, as a closer-than-expected election race spooked investors.
  • The Mexican peso, a barometer of Trump’s fortunes, tumbled the most in 8 years to a record low, while the Turkish lira sank to an all-time low and the South African rand fell the most in 4 weeks as traders dumped all but the safest assets. The US dollar was weaker against most developed currencies with the Dollar Index slumping 1.6%.
  • The benchmark 10yr yield fell to its lowest in 4 weeks, by 14bps to a low of 1.71% this morning.

Canada:

  • October housing starts fell to 192,900 from 219,400 in September, missing the median consensus of 195,000.
  • Building permits in September fell 7.0% month-on-month, more than the expected slide of 5.8%.

UK:

  • A group of pro-Brexit Conservative members of Parliament plan to press for a debate next week leading to a vote to start talks on leaving the EU, according to a report from the Telegraph.

China:

  • China’s factory-gate inflation picked up further last month while consumer prices accelerated, suggesting government efforts to reduce overcapacity have gained some traction and alleviating a source of global disinflationary pressure.
  • CPI rose 2.1% from a year earlier, matching estimates and up from 1.9% in September. PPI soared 1.2% over the same period, dwarfing the prior rise of 0.1% and soundly beating the consensus projection of 0.9%.

India:

  • In a surprise announcement, India will withdraw high-denominated banknotes, specifically 500 and 1,000 rupee notes, in a bid to crackdown against corruption. The notes in circulation will have to be deposited in banks by the end of December. Chaos prevailed across major cities as people lined up outside cash dispensing machines following the announcement.

Australia:

  • Consumer confidence in November fell, with the Westpac Consumer Confidence Index falling 1.1% to 101.3 from 102.4 prior.

Precious Metals:

  • Spot gold rallied more than 3.0% to 5 week-high of $1,323.17/Oz, as traders and investors snapped up safe haven assets in fear of a Trump victory. $1,350/Oz remains a key resistance point.
  • Spot silver advanced as well, by 3.2% to $18.8455/Oz, its highest level since Oct 4th.

Oil:

  • Crude oil for December delivery sank 4.2% to $43.07/bbl, as government data which showed US crude supplies increased by 4.4 million barrels last week was compounded by investors shunning riskier assets such as oil as the US presidential race continues to be a tight one.

 

USDSGD:

  • Spot 1.3878
  • USDSGD retreated by as much as 0.3% earlier today on a broadly weaker US dollar this morning, with the US presidential race coming in more tightly-contested that most expected.
  • On a longer-term basis, the currency pair may find decent support at the 1.3800 level and some resistance at the 1.4000 psychological handle. Pending on the US election results, USDSGD could go either way, from 1.4200 to the upside, to 1.3500 to the downside.

 

AUDUSD:

  • Spot 0.7684
  • AUDUSD swung wildly over the past 12 hours, rising 1.0% to a 6-month high of 0.7778 last night, before reversing gains to 0.5% lower at 0.7660 earlier this morning.
  • The key resistance remains at 0.7835, while to the downside, the main support resides at 0.7500.

 

USDCAD:

  • Spot 1.3377
  • USDCAD sank as low as 1.3265 last night, before recovering losses and gaining back to the 1.3400 this morning.

 

USDCNH:

  • Spot 6.7820
  • USDCNH gained 0.1% past 6.8000 last night before a weaker USD this morning drove the currency pair 0.3% lower to 6.7794.
  • The PBOC weakened its fixing earlier today by 0.02% to 6.7832 to the dollar.

 

USDJPY:

  • Spot 101.52
  • USDJPY slumped by as much as 3.0% to 101.51 due to increasing anxiety over the probability of a Trump victory in the US presidential elections.
  • A Trump victory will almost certainly drive USDJPY below the key support of 100.

 

GBPUSD:

  • Spot 1.2499
  • GBPUSD rose 0.8% to 1.2499 earlier today on the back of broad USD weakness.
  • The 1.2100 handle remains a key support level, while 1.2800 acts as an important resistance handle.

 

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