Article / 19 September 2016 at 1:22 GMT

Morning Report APAC: Better-than-expected US CPI pushes USD higher

APAC Sales Trading Desk / Saxo Capital Markets


  • Australia's market open was delayed by a technical glitch
  • It will open at 0930 Singapore time
  • Asian sentiment to be dominated by central bank decisions in the US and Japan
  • The better-than-expected CPI pushed the USD higher against all the currencies
  • China’s total credit reached 255% of GDP at the end of last year

By Saxo APAC Sales Trading

Economic data of the day (Singapore Time; GMT+8)


Overnight news

United States

  • CPI rose more than expected at 0.2% MoM and 1.1% YoT (Exp. 0.1% and 0.2%). Core CPI rose 2.3% YoY (2.2%). The gains were mainly due to a sharp increase in medical-care prices, up 1%. YoY food prices were unchanged, the weakest reading on food inflation since February 2010, and energy prices were down 9.2%. Shelter costs rose 3.4% YoY.
  • University of Michigan Sentiment dropped to 89.8 (Exp. 90.6) in September 


  • The Bank for International Settlements warned in its quarterly report that China’s credit to GDP gap has reached 30.1, the highest to date. It is also significantly higher than the scores in East Asia's speculative boom on 1997 or in the US subprime bubble before the Lehman crisis.
  • China’s total credit reached 255% of GDP at the end of last year, a jump of 107 percentage points over eight years. 
  • Outstanding loans have reached $28 trillion, as much as the commercial banking systems of the US and Japan combined. Corporate debt alone has reached 171% of GDP (The Telegraph). 

Foreign exchange



  • The better-than-expected CPI pushed the USD much higher against all the currencies. DXY rallied 0.86% to the 200d MA at 96.079. EURUSD dropped to close just above the 200d MA. Expect to see some long stops below 1.1100. Otherwise we will consolidate around 1.1200.
  • The biggest mover was GBP, which dropped 1.8% to reach the strong support at 1.3000 just before the Bank of Japan and Federal Open Market Committee meetings this week.
  • In Emerging Markets, USDMXN broke the highs of the year and the record highs to reach 19.77 on poor liquidity due to closed markets (Independence Day). 
  • The only performer within the EM world was USDBRL, which dropped 1.2%, due to positive sentiment generated by President Michel Temer’s veto of a wage increase for some public work.

Foreign exchange movements


  • The market has been selling back some gamma last Friday as we are getting closer to the BoJ meeting and the decay starts to be expensive.
  • USDMXN curve continues to be well bid following the spot higher.


  • Short-term Treasury yields logged their strongest rally in three weeks following a better-than-expected rise in consumer prices. UST 5s30s curve snapped its 10th consecutive day of steepening after hitting resistance around 130 basis points.
  • 10-year German bund yield slid back to negative territory after floating above zero for few days after the European Central Bank disappointed investors hoping for signs of further stimulus. 






  • US stocks ended lower as energy shares were pressured by weaker oil prices and upcoming central-bank meetings weighed on sentiment. VIX Index retreated 5.71% to 15.37.
  • Oracle slumped 4.8% as earnings and revenue missed expectations, despite earnings rising 5% in the first quarter on continued growth in its cloud-computing operations.
  • Johnson & Johnson (down 0.32%) agreed to buy Abbott Laboratories (up 1.82%) eye-surgery equipment unit for $4.33 billion, moving the healthcare giant toward its goal of boosting its three core businesses.
  • Europe’s Stoxx 600 falls 0.7% on above average volume.
  • Financial stocks were the worst performing, pushing the Bank Index down 2.1%, dragged down by Deutsche Bank, which tumbled 8.5% after the US Department of Justice asked the bank to pay $14 billion to settle civil claims related to mortgage-backed securities.
  • Orange up 2% on confirmation that CEO Stephane Richard told investors last week that preliminary consolidation talks have resumed between SFR, Iliad and Bouygues.

Asia-Pacific stocks

Hong Kong

Analyst ratings

  • Air China (753 HK): Cut to neutral from buy at UBS
  • Ping An (601318 CH): Raised to buy at HSBC


  • HK PPT: latest Centa-City Leading Index down 0.68% WoW to 136.57
  • *SHK(16) Grand Yoho has sold more than 1000 units since launched for less than a month, cashing out at around $8.5bn
  • StanChart(2888) is considering spin off its private-equity business to the related unit's managers
  • China vanguard(8156) issued a profit warning, expecting a significant loss for FY16 vs net profit a year ago, mainly attributable to a decline of over 65% in revenue contributions from the group’s self-service lottery business
  • PacificTextiles(1382) issued a profit warning, expecting to record approximately 25% decrease in operating profit for interim vs operating profit of $641mln a year ago
  • Fosun(656) and China Gas(384) is said to have been put together to bid for a majority stake in National Grid’s GBP11b gas business
  • VP(806) cos’ AUM was $13.8bn until end of August, down 4.17% YoY
  • Cosco Ship Port(1199) Jan-Aug total throughput +3.9% YoY to 62.2 mln TEUs
  • Singyes Solar(750) proposes separate listing of Singyes New Materials
  • COLI(688) announce that it completed the acquisition of CITIC(267)'s property portfolio for RMB31bn; COLI needed to issue 1,096mln shares to CITIC at HK$27.13 per share for a total value of HK$29.7bn, representing approximately 10% of the enlarged share capital of the company
  • Sunac(1918) buys property assets from Legend for RMB13.8bn
  • Henderson(12) announced a disposal of Golden Centre in HK, at total consideration of $4,368mln; the estimated gain on disposal was ~$1,996mln
  • CGN Power(1816) was invited to make a second-round bid for Chevron’s Asian geothermal energy assets, which could value $3bn
  • Shanghai Industrial Urban(363) to buy two residential villa projects in Shanghai’s Minhang district


Analyst ratings

  •  AGL Energy (AGL AU) raised to buy vs hold at Shaw & Partners
  • Santos (STO AU) raised to buy vs neutral at UBS
  • Myer (MYR AU) cut to neutral vs buy at UBS


  • Synlait Milk (SML NZ) full-year net profit triples to NZ$34.4mln, plans share issue
  • Macquarie Group (MQG AU) to use funds from new EUR4bn infrastructure fund in Italy, CEO says in interview with Il Sole 24 Ore

Source: CIMB / Bloomberg


 The waiting game ... the Australian market open was delayed by a technical glitch. Source: iStock

– Edited by Gayle Bryant

This report was compiled by the Saxo APAC Sales trading team in Singapore – the home of social trading. Follow the team on @SaxoStrats or post your comment below to engage with Saxo Bank's social trading platform. 

All material contained herein is provided for your general information. The information and commentaries are not intended to be and do not constitute financial advice, investment advice, trading advice or any other advice or recommendation of any sort offered or endorsed by Saxo Capital Markets Pte. Ltd. (“SCM SG”). Any expression of opinion (which may be subject to change without notice) is personal to the presenter and/or author; they do not reflect the view or opinion of SCM SG or its affiliates, neither do they constitute an endorsement of SCM SG’s view or analysis of the same.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. SCM SG does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment based on any commentaries or information provided here.
For further information, please click here.  

Saxo Capital Markets Pte Ltd ("Saxo Capital Markets") is a licensed subsidiary of Saxo Bank A/S, an online trading and investment specialist. Saxo Capital Markets serves as the APAC headquarters and holds a capital markets services licence under the Monetary Authority of Singapore; and a commodity broker licence issued by the International Enterprise Singapore. Clients can trade Forex, CFDs, Stocks, Futures, Options and other derivatives via SaxoWebTrader and SaxoTrader, the leading multi-asset online trading platforms.
Trading risks are magnified by leverage - losses can exceed your deposits. Trade only after you have acknowledged and accepted the risks. You should carefully consider whether trading in leveraged products is appropriate for you based on your financial circumstances. Please consider our Risk Warning and General Business Terms before trading with us. Please see full General Disclaimer.

Thousands of serious traders receive free news and analysis from Saxo Capital Markets each day. Saxo Capital Markets never sends these emails unsolicited; they are sent following acceptance of your membership and subscription request by Saxo Capital Markets at If you do not wish to receive any emails from Saxo Capital Markets in the future, please reply to this email with the word "UNSUBSCRIBE" in the subject header.

Copyright | Disclaimer | Risk Warning | Privacy Policy | Contact Us
Samsung Hub | 3 Church Street | # 30-01 | Singapore 049483
Company No. 200601141M


The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail