Most Asian equities pared earlier losses, following positive manufacturing data from China indicating a pickup in economic activity in the world’s second-largest economy, which also drove the Australian dollar and some industrial metals higher.
- ADP employment in August rose by 177,000, more than the expected rise of 175,000; July’s rise was revised upwards from 179,000 to 194,000.
- The S&P 500 Index wiped out its entire gains for August yesterday, with the gauge dropping 0.2% for the day and 0.1% for the month. Energy producers led declines, dropping with crude oil.
- Energy companies trimmed their August advance to 0.6%, while utility stocks posted their biggest monthly decline in more than a year. Phone companies had their worst month since 2015 as technology and financial shares both rose for a second month.
- The greenback pared some gains, as the Bloomberg Spot Dollar Index retreated 0.2% earlier today and looks set to snap a 4-day winning streak.
- The benchmark 10yr Treasury yield rose 1bp to 1.58%; 10yr yields have been trading in a fairly tight range for the past month, mostly kept within the bounds of the 1.50% – 1.60% range.
- Canada’s economy grew at the fastest pace in three years in June, regaining momentum after Alberta wildfires led to the biggest quarterly contraction since 2009.
- GDP for June grew 0.6% month-on-month and 1.1% year-on-year, better than the projections of 0.4% and 1.0% respectively.
- On a quarterly annualized basis, GDP fell 1.6%, more than the 1.5% expected, owing largely to limited oil production due to the Alberta wildfires.
- Brazilian President Rousseff was ousted by lawmakers, paving the way for a shift in economic policy after 13 years of leftist rule.
- Retail sales in July was stagnant from a month earlier, missing projections of a 0.3% rise.
- Private capital expenditure over the second quarter fell 5.4%, more than the 4.0% drop forecasted.
- On a more positive note, according to the Bureau of Statistics, Australian firms have planned to spend A$105 billion in 2016-2017, more than the originally expected A$97 billion.
- China’s official manufacturing PMI in August rose to expansion territory of 50.4, from 49.9 the previous month and beating the consensus estimate of 49.8. This was the highest since 2014.
- The Caixin’s measure, however, declined to 50.0 from 50.6 and was lower the expected figure of 50.1.
- Non-manufacturing PMI fell to 53.5 from 53.9.
- Spot gold declined 0.8% to $1,304.29/Oz last night, its lowest level post-Brexit.
- Gold’s gains in 2016 have been dented after Fed officials indicated a greater likelihood of further monetary tightening before the end of the year. Traders will closely monitor tomorrow’s nonfarm payrolls report as a better than expected one would further increase odds of a September hike, and thus further dampening demand for precious metals.
- Silver for immediate delivery continues to be supported above the key $18.50/Oz level.
- Crude oil futures expiring in October slumped 3.6% to $44.70/bbl, after an energy report showed crude inventories last week rose by 2.3 million barrels, more than the 1.3 million projected. Oil imports into America increased by 3.2% to 8.9 million barrels last week, the highest since Sep 2012.
- Spot 1.3637
- The Singapore dollar maintained near its weakest levels in more than 2 months against the dollar, ahead of tomorrow night’s key US jobs report.
- Spot 0.7538
- AUDUSD rebounded off the 0.7500 handle to gain 0.5% to 0.7548, buoyed by better forward-looking capex figures and positive manufacturing data from China.
- Spot 1.3105
- The loonie fell to its weakest level against the dollar in 3 weeks after Canadian GDP contracted by the most since 2009, on a quarterly annualized basis.
- USDCAD rose 0.3% to a high of 1.3146 last night.
- Last night’s GDP result was worse than the BOC’s most recent forecast of -1.0%, which could lead the central bank to cut is full-year growth target rate and weaken the Canadian dollar further.
- Spot 6.6902
- Offshore yuan advanced following better-than-expected manufacturing PMI data, gaining as much as 0.1% to 6.6865 against the dollar.
- The PBOC strengthened its fixing by 0.2% to 6.6784 against the dollar.
- Spot 103.27
- USDJPY maintained near one-month highs, just below the 103.50 resistance level. The pair is currently on a 5-day positive streak.
- Spot 1.3145
- GBPUSD edged 0.1% higher earlier today to 1.3152.
- Goldman Sachs analysts commented that the pound will likely weaken further once Brexit talks between European leaders commence, and especially so if leaders take a tough negotiating stance once Article 50 is triggered.