Issue#: 377/2017

Spot values at a glance:







Daily Observations:

Asian equities were mixed, with gains in Tokyo and Sydney overshadowed by losses in Shanghai, Hong Kong and Seoul.  The yen declined on speculation Japan’s prime minister will press for a stimulus package alongside his expected call for a snap election. Chinese developers plunged as officials tightened housing curbs.


  • Speaking at the United Nations General Assembly on Saturday, North Korea foreign minister Ri Yong Ho said US President Donald Trump, not North Korean leader Kim Jong Un, is the one on a suicide mission, adding that the regime was prepared to strike first with nuclear weapons. These remarks came on the heels of US bombers flying a mission off the North Korean coast and an earthquake near the location of its Sept. 3 test site.
  • North Korea’s possession of nuclear weapons is preventing the US from launching a first strike against the rogue nation, Russian Foreign Minister Sergei Lavrov said in an interview. He said that the Americans “won’t strike first because they know for sure, rather than suspect, that it has atomic bombs”.
  • China slapped fresh sanctions on North Korea, curbing some oil product exports to the country. China halted the outbound shipment of condensate and liquefied natural gas to North Korea from Saturday, and will limit exports of refined oil products from Oct. 1, the Ministry of Commerce said in a statement published late Friday.


  • President Donald Trump ordered restrictions or suspensions on travel to the US from 8 countries, replacing his ban on travellers from 6 Muslim-majority nations that had been limited by court challenges. The new restrictions impact travel to varying degrees from Iran, Libya, Syria, Yemen and Somalia, all of which were on the original list. The US will also now restrict or ban travel from Venezuela, North Korea, and Chad. Sudan is no longer on the list.
  • What appears to be the Republican Party’s last-ditch effort to repeal and replace the Affordable Care Act this year doesn’t have sufficient support from its senators. 2 have publicly said they’ll vote against the Graham-Cassidy bill, while others have publicly expressed misgivings. The measure will fail if more than 2 Republicans vote against it, and the Senate will only be able to pass such a proposal with a simple majority by Sept. 30. At least 21 million fewer Americans would have health insurance from 2020 through 2026 if the Graham-Cassidy proposal becomes law, according to the Brookings Institute.
  • Republicans tax negotiators are targeting a corporate tax rate of 20%, according to 2 people familiar with the matter. That would be higher than the 15% rate that Trump wants, but could signal progress on a top legislative priority that would likely be supportive of the dollar.
  • The Markit US Manufacturing PMI for September rose to 53.0 from 52.8 last month, in line with expectations. Services PMI slipped to 55.1, from 56.0, faring worse than the median forecast of 55.8.
  • The US dollar was little changed over the weekend, with the Dollar Index continuing to be supported above the 92 handle. With the euro and sterling showing resiliency despite the German elections and Brexit concerns, any gains in the Dollar Index is likely to be capped for now.
  • US Treasuries gained last Friday after North Korea ratcheted up its threats against the US. The benchmark 10yr Treasury slipped 3bps to 2.25% on Friday, and was little changed earlier today.
  • US equities ended little changed on Friday, with the Dow Jones Industrial Average falling slightly by 0.04%, and the S&P 500 and Nasdaq Composite indices eking out gains of 0.06% and 0.07% respectively.


  • Canadian consumer prices continued to show some signs of pick up last month, Statistics Canada said Friday in a report that could bolster policy makers’ confidence inflation is trending higher from extremely low levels.
  • August inflation accelerated 1.4% year-on-year, from 1.2% prior, but missing the median forecast of 1.5%. On a non-seasonally adjusted basis, CPI gained 0.1%, up from zero growth in July, but lower than the 0.2% expected.
  • Retail sales in July grew 0.4% from a month ago, exceeding the 0.2% forecast.


  • The UK had its credit rating cut by Moody’s Investors Service on Friday, which blamed Brexit, a sluggish economy and Theresa May’s weakened political position. Moody’s lowered the UK’s credit rating by one notch to Aa2, the third-highest investment grade.
  • The Moody’s announcement came just hours after Prime Minister May gave a key speech on her vision for the UK’s separation from the EU. In it, she said she would seek a transition period of around two years after Brexit, but failed to outline specifics on the divorce bill.


  • Angela Merkel won a fourth term as German chancellor in a victory that was marred by the hollowing out of support for the 2 main parties and a surge for the populist AfD in a clear rebuke to her open-doors refugee policy.
  • Both Merkel’s Christian Democrat-led bloc and her main challenger, Martin Schulz’s Social Democrats, plunged to historic lows as votes flowed to the anti-immigration Alternative for Germany, or AfD, in a sign of the growing polarization in Europe’s biggest economy. The AfD became the first far-right party to enter parliament in about seven decades.


  • Chinese property stocks plunged in Hong Kong after cities added housing curbs, dashing speculation that the authorities would pull back on measures to cool rising prices. 8 cities including Chongqing and Nanning rolled out restrictions over the weekend, with most banning home resales within two to three years of purchase, the official Xinhua News Agency reported.

Precious Metals:

  • Spot gold retreated 0.6% to $1,289.62/Oz to retest last Friday’s low. The precious metal has been capped by its $1,300/Oz psychological level and supported above its 50-day moving average of $1,290/Oz.
  • The line in the sand continues to be $1,300/Oz. A recovery back above it could signal more upside for the precious metal. Otherwise, the next support target that may be tested could be around $1,265/Oz – the 50% retracement level following gold’s rally from mid-July to mid-September.
  • Silver for immediate delivery continues to remain technically weak. Bias remains to the downside following a failure to hold above the $17/Oz level. Spot price for silver was 0.6% lower at $16.8930/Oz earlier today.


  • Crude oil futures slid 0.3% to $50.52/bbl earlier today, but continue to hold above $50/bbl for the fourth consecutive session as OPEC and Russia said they were about halfway toward clearing a global glut and urged fellow producers to stay focus and finish the job.
  • OPEC Secretary Barkindo said the OEPC-led group implemented more than 100% of its agreed cuts last month and bloated stockpiles have been “massively drained”. Russia signalled it would be willing to extend supply curbs past the end of March if needed.

Electric Cars:

  • Tesla slumped on Friday after reporting that it will discontinue its cheapest Model S, the rear-wheel drive 75, and shifting to an all-wheel drive line-up for the Model S, to simplify its product offering.


  • About 68% of global investors intend to increase green investments and one-in-two companies has a strategy to reduce their environmental impact, according to a survey commissioned by HSBC Plc published Sept. 12. Most companies said they lack any clear competitive advantage to be more transparent, particularly regarding cost of funding. Only 66% of the investors surveyed hold green bonds, which isn’t surprising given that total outstanding issuance is relatively small at $232.2 billion in July, according to the report.
  • The report estimates that about $90 trillion of investment is needed in new green infrastructure over the next 15 years. In 2016, $22.9 trillion of assets were managed under responsible investment strategies, a 25 percent increase from 2014.
  • In separate news, Morgan Stanley and Citigroup Inc. announced they will get all of their energy from renewables in a few years. The banks are aiming for their operations to be carbon-neutral, Morgan Stanley by 2022 and Citi by the end of the decade. Both plan to buy power from clean energy projects.

Solar Energy:

  • Solar installers are looking to partner with companies, as they wrestle with a market that is shrinking after 16 years of rapid growth. Their long-time sales model of knocking on doors, cold calling at home and setting up mall kiosks has proven to be costly. Some have realised it might be more effective to use the umbrella of bigger established companies to find customers, according to a Bloomberg report.
  • Sunrun Inc., for example, will try to sell panels through Comcast Corp., the biggest cable-TV company in the U.S. Last month, the two agreed to a deal in which Comcast will use its vast marketing arm to tap some of its 27 million customers for solar. Vivint Solar Inc. is now bundling its panels with an energy management system offered by Vivint Smart Home, a sister company.
  • Solar companies hope the alliances will solve a problem of high customer-acquisition costs that often run 20% of expenses, sometimes exceeding the panels themselves. They also address another issue: Some potential customers are reluctant to sign on to decades-long contracts with relatively small, little-known companies. That could change by associating with brand names.
  • Through early 2016, installers had an almost singular focus on growth, using no-money-down leases to pump up sales. The industry grew a staggering 48% in 2015, but slowed last year to 20%, and seems to be coming to halt this year with new residential installations expected to drop by 2.4% over 2016, according to Bloomberg New Energy Finance. Shifts in government policies have played a big role in diminishing some of the financial incentives for homeowners to install a solar system. The decline has been most evident in California, the biggest US solar market.


  • The vulnerability of governments and businesses to cyberattacks was exposed again last week when a top US financial regulator said hackers had breached its electronic database of market-moving corporate announcements in 2016, and may have profited from the information they stole through the use of illicit trades.
  • Singapore has overtaken nations including the US, Russia and China as the country launching the most cyber-attacks globally, according to Israeli data security firm Check Point Software Technologies Ltd. A key Southeast Asian technology hub, much of the internet traffic flowing through Singapore originates in other countries. That means a cyber-attack recorded as coming from Singapore may have been launched outside the country.


  • Spot 1.3467
  • USDSGD was steady earlier today ahead of August inflation data – the last major economic release before the MAS hold its bi-annual policy review in October.
  • The main trend since the start of the year remains to the downside, although a break above the key resistance around the 1.3600 could indicate a reversal is on the cards.
  • The immediate resistance remains around the recent high of 1.3539, while the key support below lies at 1.3350.



  • Spot 0.7954
  • AUDUSD was largely flat for the day, holding above its 50-day moving average of 0.7950.
  • Further strength in the Australian dollar may be capped, with iron ore futures continuing to weaken. A retreat back to 0.7800 is possible.



  • Spot 1.2330
  • USDCAD inched 0.1% lower to 1.2330, with the Canadian dollar starting to strengthen again against the US dollar after weakening against it for the past 2 weeks, and following Friday’s improving inflation data.
  • The key resistance remains along the 1.2400 handle.



  • Spot 6.5956
  • The PBOC weakened its reference rate by 0.13% earlier today, to 6.5945 per US dollar – the weakest level since August.
  • USDCNH advanced 0.3% back to its 6.6000 handle.



  • Spot 112.21
  • The yen weakened by as much as 0.5% earlier today to 112.53 on speculation PM Shinzo Abe will press for a stimulus package alongside his expected call for a snap election.
  • USDJPY is expected to be supported above the 111 handle, while the main resistance lies at the 6-month high of 114.48.



  • Spot 1.3536
  • GBPUSD advanced 0.2% to 1.3537, extending Friday’s rebound from a 1-week low. It remains to be seen if the pair can hold onto gains, with Brexit talks due to restart today.
  • On the monetary policy front, the BOE is still widely expected to raise rates in the coming months, and increasing rate hike expectation should push to currency pair toward the 1.4000 handle.
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UEN: 201419754M

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