Daily Observations:

Selloffs in equities continued in Asian trading this morning after a slide in oil prices overnight fueled addition risk-off sentiment among investors, as they continue to tread carefully ahead of next week’s key central banks’ meetings in Japan and the US.

US:

  • Import prices in August declined 0.2% month-on-month, led by industrial and auto prices; analysts were predicting a 0.1% increase, which also happens to be July’s reading. Prices from goods exported from the US dropped 0.8%, the most since January, reflecting slumping commodity prices.
  • The S&P 500 Index declined 0.1% overnight, reversing gains of as much as 0.7% as selling from oil and gas producers which led decliners spread over to the broader market towards the close. The gauge is currently testing a significant support level – 2,120, which coincides with its 100-day moving average.
  • The dollar’s recent rally lost some steam, with the Bloomberg Dollar Spot Index edging 0.1% lower, reversing earlier gains in the session. Goldman Sachs is holding fast to its bullish dollar call, and expects the greenback to strengthen another 15% through 2019, based on its forecast for a 3 percentage point rate hike cycle over the next 3 years.
  • The benchmark 10yr Treasury yield dropped 3bps to 1.70%, following a 6bps gain on Tuesday.
  • Mohamed El-Erian, chief economic adviser at Allianz SE, urged the Fed to get its next rate hike over and done with, further adding that the timing would be unlikely to alter a “shallow cycle” of increases.
  • According to an Ohio poll, Trump currently leads Clinton 48% to 43%.

Canada:

  • Bank of Canada’s Senior Deputy Governor Carolyn Wilkins said slowing growth increases risks to the global economy even as it makes monetary policy less effective. She added that fiscal policy can be a more powerful tool to boost growth and that means governments need to take a more active role which includes making infrastructure investments and structural reforms.

UK:

  • The BOE is expected to leave rates unchanged later today at 0.25%, after its recent 25bps rate-cut last month.

Japan:

  • Kyodo News reported that the BOJ could effectively scrap its 2-year time frame for achieving its 2% inflation target at its meeting next week. In addition, the central bank will also consider cutting its negative rate from -0.1% to -0.2%.

China:

  • Aggregate financing in August jumped to 1.5 trillion yuan, more than the 900 billion expected and the 488 billion reported in July.

Australia:

  • Unemployment rate in August fell to the lowest in 3 years – 5.6%, as fewer people sought work; analysts were predicting a reading of 5.7%.
  • Employment unexpectedly drop 3,900 from July, missing the consensus forecast of a 15,000 gain. Full-time employment gained by 11,500, while 15,400 part-time jobs were shed.
  • Participation rate, a measure of labor force as a share of population, declined to 64.7% from 64.9%; economists predicted 64.9%.

Singapore:

  • According to data compile by Knight Frank, annual rents on upper floors of Singapore high-rise offices have fallen 7% in the first 6 months of this year.

Precious Metals:

  • Spot gold reversed previous day’s declines, and was 0.3% higher earlier today at $1,326.08/Oz.
  • Holding in the world’s largest gold ETF – the SPDR Gold ETF, is at the lowest level since Jun 2014, as investors nervously await the Fed’s rate decision next week.
  • Silver for immediate delivery is currently fluctuating around the $19/Oz handle; its next support lies at the $18.50/Oz level.

Oil:

  • Crude oil for October delivery extended declines, sliding a further 2.9% to settle at $43.58/bbl last night, despite government data showing a surprise drop of 559,000 in inventories last week.
  • Libya is lifting port-export restrictions while Exxon and Shell indicated they are ready to resume operations in Nigeria. These moves could further increase total per-day production by another 800,000 barrels.

 

USDSGD:

  • Spot 1.3657
  • USDSGD retreated 0.3% to 1.3618 last night, before paring back some of its declines this morning.
  • Momentum remains to the upside and the next resistance of 1.3722 could be reached soon.

 

AUDUSD:

  • Spot 0.7458
  • AUDUSD sold off to intraday lows of 0.7446, or 0.3% lower, following the release of its jobs report. However, the sell-off reversed almost immediately as the currency pair soon recovered back to pre-jobs report levels.
  • AUDUSD’s next support comes in around the 0.7400 level.

 

USDCAD:

  • Spot 1.3212
  • USDCAD advanced 0.3% to 1.3214, breaking past the 1.3200 level for only the fourth time since April this year.
  • Continued weakening of oil prices and strengthening of the dollar could propel USDCAD beyond its next resistance level of 1.3253.

 

USDCNH:

  • Spot 6.6709
  • No fixing today due to a holiday in China.
  • USDCNH fell 0.2% to an intraday low of 6.6638 last night, the second time in a month it has bounced off that level.

 

USDJPY:

  • Spot 102.24
  • USDJPY declined 0.7% to 101.95 earlier today. The currency pair has been buoyed above the 102 handle this week, amid ongoing speculation that the BOJ may seek to further monetary easing at its meeting next week.

 

GBPUSD:

  • Spot 1.3257
  • GBPUSD rose 0.6% to 1.3279, erasing prior day’s declines as investors await the BOE’s rate decision due later today.

 

© Jachin Capital Pte Ltd

UEN: 201419754M


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