Daily Observations:

The ECB yesterday shot down talk it was contemplating tapering its monetary easing, triggering a rally in the US dollar. Most Asian stocks fell earlier today as the US dollar neared seven-month highs and dragged down crude oil and precious metals’ prices. The yuan weakened to a 6-year low.

US:

  • Initial jobless claims last week rose to 260,000 from 246,000 prior, more than the 250,000 anticipated.
  • Existing home sales in September rose 3.2% month-on-month, reversing from a drop in August and exceeding the consensus projection of a 0.4% gain.
  • The Philadelphia Fed Business Outlook Index fell to 9.7 in October, from 12.8 last month and better than the 5.0 estimated by economists.
  • The S&P 500 Index retreated 0.1%, following the biggest back-to-back rally in a month. Telecommunication stocks led losers after Verizon reported subscriber additions slumped amid ongoing price wars.
  • The US dollar strengthened broadly, with relative strength stemming from euro weakness as well. The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, added 0.2% earlier today after ending last night’s session 0.5% higher.
  • The benchmark 10yr Treasury yield rose 1bp to 1.75%. Longer-dated Treasuries outperformed, taking their cue from German bunds on bets the ECB will continue targeting longer-ended maturity debts.

Canada:

  • Prime Minister Justin Trudeau’s external council of economic advisers has released its first recommendations on boosting growth, which includes the creation of an infrastructure bank capitalized with C$40 billion in government financing over 10 years.
  • The bank could issue infrastructure bonds and would “de-risk” projects which include toll highways, bridges, high-speed rail, port and airport expansions, broadband internet and power transmission.

Europe:

  • The ECB left rates unchanged, as expected, and left its asset purchase target at 80 billion euros per month. Draghi said bank officials discussed neither tapering nor ending its QE program, leaving traders and investors to wait until December for further guidance.
  • The euro fell 0.6% against the US dollar to its weakest post-Brexit level.

UK:

  • Retail sales last month came in poorer than expected. Excluding auto fuel, retail sales were stagnant from a month earlier and rose 4.0% from a year earlier, less than the estimates of 0.2% and 4.4% respectively. Factoring in petrol, retail sales grew 0.0% and 4.1% over the respective periods, less than the consensus estimates of 0.3% and 4.7%.

China:

  • China’s overheated property market is showing tentative signs of cooling, as authorities stepped up home-buying curbs to avert a housing bubble.
  • New home prices gained last month in 63 of the 70 cities the government tracks, down from 64 in August. Prices dropped in 6 cities, compared to 4 a month earlier.

Precious Metals:

  • Spot gold was lower by 0.5% earlier today, retreating back below its 200-day moving average to $1,263.50/Oz. Its failure to hold above the 200-day moving average could indicate more weakness to come.
  • Despite trading lower, gold is headed for its first weekly advance in four, as investors continue to boost holdings in ETFs backed by the metal which rose for the seventh day to 2,060 metric tons yesterday – the highest level since June 2013.
  • Silver for immediate delivery fell 1.3% to $17.4151/Oz, and could test its 200-day moving average of $17.3249/Oz soon.

Oil:

  • Crude oil for December delivery retreated from a 15-month high, falling 2.3% to settle at $50.63/bbl, after the head of Rosneft PJSC said Russia is capable of raising production “significantly” and Nigeria lowered prices for its oil in a bid for market share.

 

USDSGD:

  • Spot 1.3950
  • The Singapore dollar is poised to log its fourth straight weekly loss, on the back of a stronger US dollar after the ECB reiterated its easing stance yesterday.
  • USDSGD rose 0.5% to 1.3954 earlier today; the psychological handle of 1.4000 remains within striking distance.

 

AUDUSD:

  • Spot 0.7627
  • AUDUSD’s declines yesterday extended into today, with the currency pair falling 0.7% to an intraday low of 0.7618, following yesterday’s poor employment numbers.

 

USDCAD:

  • Spot 1.3241
  • USDCAD continued its rally from yesterday following dovish comments from the BOC and helped by the selloff in oil last night.
  • The currency pair ascended 0.8% to 1.3249, breaking above its 200-day moving average for the second time in 2 weeks.

 

USDCNH:

  • Spot 6.7642
  • The yuan reached a 6-year low in both on shore and offshore markets, after the PBOC signalled tolerance for a weaker rate with its fixing.
  • The PBOC set its reference rate 0.37% weaker at 6.7558 this morning, the weakest since Sep 2010.
  • USDCNH rose 0.3% to 6.7666 earlier today.
  • Analysts foresee further weakness for the yuan over the next few months, citing reasons such as a likely rate-hike in the US and seasonal demand for US dollars in China during year-end.
  • The currency is now just 0.9% off 6.8300 – the level at which China pegged the yuan to after the 2008 global financial crisis.

 

USDJPY:

  • Spot 104.18
  • USDJPY extended prior day’s gains, advancing 0.5% to 104.20 earlier today, driven by overnight dollar strength.

 

GBPUSD:

  • Spot 1.2228
  • GBPUSD fell 0.4% to 1.2210, amid continuing concerns of a hard Brexit and comments from European Council President Donald Tusk saying that Prime Minister Theresa May had confirmed Brexit talks would be triggered by end-March 2017.
  • French President Hollande has warned May that she is setting herself up for a bumpy ride and centre-right leaders from Merkel’s European alliance insisted in their private talks that Britain will have to pay a price for leaving.

 

© Jachin Capital Pte Ltd

UEN: 201419754M


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