Asia morning update

Jawboning down the USD, President Donald Trump’s words had probably been the biggest mover for markets in the overnight session.

Source: Bloomberg

Trump and the USD

The USD index had slumped from the trade around 100.70 to the depths of 100.10 into Friday morning, after President Donald Trump expressed that the dollar is ‘getting too strong’ in an interview. This had not been the first occurrence of its kind, after having done so previously to the effect of a USD dip as well. It might however be some consolation for the market as the US President had also noted that his administration would not label China a currency manipulator in the Treasury report due this month, against earlier threats. This certainly eliminates some concerns for investors in the Asian region.

In reference to the US dollar, the President had also reflected that he prefers a low-interest rate policy, while at the same time touching on the fact that Federal Reserve chair Janet Yellen has not been ruled out for re-nomination when her term ends in 2018. This adds to the list of items which the President had changed his stance on post-inauguration. Despite the above, the biggest way the President can influence markets may still be on the policy end.

Singapore economy

Separately, the advance estimate of Singapore’s first quarter GDP arrived this morning, missing expectations slightly at 2.5% year-on-year (YoY) against the market expectation of 2.6% YoY and the previous quarter growth rate of 2.9% YoY. In seasonally adjusted annual rate (SAAR) terms, Q1 GDP declined 1.9% quater on quater (QoQ), close to the market’s -1.8% QoQ expectation. This is nevertheless a figure on the higher end of the Monetary Authority of Singapore’s (MAS) 1-3% and private forecasters’ 2.0% full year growth expectation. A breakdown has shown that the manufacturing sector had obviously been enliven from the improvement in demand in the region, growing 6.6% YoY.

Meanwhile, the MAS had also kept policy unchanged as the market expected, maintaining its zero appreciation stance. The monetary authority had also maintained the view that this stance is appropriate for an ‘extended period’, likely laying to rest concerns that they may turn hawkish soon. Indeed, with views that the Singapore Nominal Effective Exchange Rate (NEER) having been traversing within the mid-range and the USD evidently softer than expected, there may be less threats to the current monetary policy stance. With the amalgamation of the two, USD/SGD had only seen a brief moment of volatility. The currency pair later returned to trade around $1.3960, levels battered to after President Donald Trump’s comments.

Early movers in the Asian region saw another mixed open, though the Nikkei 225 had dejectedly sunk into losses of over 1.0% once again (as of 9.00am Singapore time) from JPY changes. The Hong Kong and Singapore markets are expected to face pressure this morning, taking after the trend from the US. Ahead of bank earnings on Wall Street, the market can be seen closing some positions, and the financial sector on the S&P 500 index had been one of the worst performers. Client sentiment on IG has not been strong either with over 60% short positions on the US 500 (which sees the S&P 500 as an underlying market), showing the cautious sentiment in markets.

Besides the upcoming bank earnings releases, the attention is expected to rest on China’s March trade balance in the day, ahead of the Good Friday holiday tomorrow.

Yesterday: S&P 500 -0.38%; DJIA -0.29%; DAX +0.13%; FTSE -0.22%

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen. 79% van de retailbeleggers lijdt verlies op de handel in CFD’s met deze aanbieder.
Het is belangrijk dat u goed begrijpt hoe CFD's werken en dat u nagaat of u zich het hoge risico op verlies kunt permitteren.
CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen.