Asian stocks were mixed as investors weighed the health of China after inflation data earlier today countered disappointing trade figures from yesterday. The Singapore dollar slipped as the city state’s central bank left policy unchanged despite slowing growth in 3Q. Crude oil gained back above $50/bbl while gold and government bonds fell.
- Initial jobless claims for last week came in at 246,000, less than the 253,000 expected.
- The Fed’s Philadelphia President Patrick Harker said uncertainty stemming from the US presidential election might be an argument for delaying a rate increase until the November ballot. Fed Chair Janet Yellen is due to speak tonight.
- Investors piled into safer assets following Chinese trade data yesterday showed exports fell the most since February amid weak global demand; imports fell as well. Treasuries rallied, as the benchmark 10yr yield fell 3bps to 1.74%.
- The US dollar sold off overnight, as the Bloomberg Dollar Spot Index declined 0.3%, reversing earlier gains which took the gauge to its highest level in more than 6 months.
- The S&P 500 Index declined 0.3%, trimming a drop earlier of as much as 1.1%. Power companies, coveted for their high fixed pay-outs, rose with REITs and health-care shares as investors sought defensive stocks. Financial stocks slumped as a rally in Treasuries sent bond yields lower.
- EU President Donald Tusk warned that it will be a “hard Brexit or no Brexit”, stressing that the withdrawal will be “painful for Britons”. The hard-line stance reflects the European view that the UK should not get concessions and is set to lose the benefits of single-market access if it continues to focus on curbing immigration.
- September PPI stagnated from a month earlier, and fell 3.2% year-on-year; economists anticipated drops of 0.1% and 3.2% respectively.
- September inflation numbers topped forecasts, as CPI rose 1.9% year-on-year, more than the 1.6% expected and 1.3% prior. PPI surprisingly gained, advancing 0.1% from a year earlier, in contrast from a 0.8% drop last month; a 0.3% decline was projected.
- Singapore’s economy last quarter shrank an annualized 4.1% from the previous quarter, worse than the median consensus of zero growth and last quarter’s mild expansion of 0.2%.
- On a year-on-year basis, GDP rose 0.6%, missing the 1.7% expected, whilst the prior figure of 2.1% was revised lower to 2.0%.
- The MAS refrained from easing monetary policy and maintained a 0% appreciation of its S$NEER policy band, as expected, despite poorer-than-expected 3Q GDP.
- In a statement, the central bank said growth has weakened and is not expected to pick up significantly next year. It added that GDP growth for the year will be close to the lower end of the 1%-2% range, and only slightly higher in 2017.
- In its semi-annual Financial Stability Review, the RBA noted that Australian banks continue to be well-placed to address risks, and that domestic risks have shifted toward property development and resource-related areas.
- The baht rallied the most in a year and Thai equities rose following the death of the country’s king, indicating that investors expect a smooth transition of power to the new king.
- Spot gold was lower by as much as 0.4%, following its previous session’s 0.4% gain to $1,259.82/Oz.
- The $1,250/Oz handle has held well recently, but for any significant rebound to take place, the precious metal first has to overcome its 200-day moving average of $1,265/Oz.
- Silver for immediate delivery erased prior gains as well, declining 0.9% to $17.3991/Oz.
- Crude oil for November delivery gained 0.5% to settle back above the $50/bbl level, as declines in US fuel supplies and crude inventories helped offset the first nationwide oil stockpile gain since August.
- Spot 1.3863
- USDSGD maintained near 7-month highs following MAS’ policy decision this morning, 0.2% higher at 1.3864.
- Singapore dollar weakness is likely to persist, given weaker-than-expected 3Q GDP numbers, and the 1.4000 level could be reached soon.
- Spot 0.7598
- AUDUSD erased recent declines, rising 0.7% back towards the 0.7600 resistance handle, on the back of this morning’s stronger-than-expected Chinese inflation data.
- Spot 1.3203
- USDCAD fell 0.5% to 1.3185 on the back of overnight US dollar weakness and a rebound in crude oil prices.
- The momentum remains to the upside though, as USDCAD has gradually risen over the past 2 months, gaining over 3%.
- Spot 6.7349
- The PBOC strengthened its fixing for the first time in 8 days, 0.21% higher to 6.7157.
- USDCNH briefly traded above the 6.7400 handle before declining 0.1% to 6.7298.
- In a note to clients today, UBS wrote that the PBOC will probably allow further yuan depreciation as the December Fed meeting approaches, but not beyond 6.8000 by year-end on concerns about triggering capital flows.
- Spot 103.89
- The yen is headed for its third weekly decline against the dollar amid increasing speculation the Fed will hike rates later this year, and rekindling the theme of policy divergence between the US and Japan.
- USDJPY recouped all of last night’s declines, and was 0.2% higher around the 104 handle earlier today.
- Spot 1.2228
- GBPUSD rose by as much as 0.6% to 1.2272 last night before paring back some of its gains today, as the currency pair struggles to snap its 11-day losing streak.
- The 1.2100 handle is key for the stabilization of the currency pair. A break back below, and the pound could face renewed selling momentum which might take GBPUSD back below 1.2000.