Article / 19 August 2016 at 3:12 GMT

Morning Report APAC: Bullish WTI fails to ignite Asia

APAC Sales Trading Desk / Saxo Capital Markets


  • Asian stocks still around one-year high as WTI holds above $48/b
  • The JPY weakened 0.3% to 100.14 per dollar, in early Asian trade
  • Fed’s William Dudley says he puts more emphasis on labour market

By Saxo APAC Sales Trading

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



  • USD – New York Fed’s William Dudley says he puts more emphasis on labour market than GDP data as first, statisticians are better at counting jobs than people and second, because labour is part of the US Fed’s dual mandate.

Overnight news


  • August Philly Fed Manufacturing Index beats estimates at 2.0%.
  • Consensus estimates were 1.4% and forecast previous reading -2.9%.
  • Unemployment claims also lower at 262,000.
  • Forecast was 269,000 and previous reading 266,000.


  • UK retails sales unexpectedly beat post-Brexit forecasts at 1.4% against 0.1%.
  • The past month's drop in GBP encouraged tourists to snap up watches and jewellery.
  • Volume of goods sold in stores and online also jumped 1.4% after dropping 0.9% in June.
  • USDGBP also surged on data release.
  • Yesterday's ECB July minutes indicate it may meet expectations and keep its ultra-loose monetary policy in place at September 8 meeting.
  • “The so-called Brexit vote was expected to affect primarily the UK economy, but the unpredictability of the impact on trade meant it “could affect the global economy in deeper and less predictable ways than through the direct trade channel”.
  • Brexit impact concerns could extend ECB’s €80 billion a month quantitative easing program beyond the northern spring 2017 deadline.



USD traded soft throughout yesterday on the view that FOMC minutes show a Fed divided.

USDJPY trades around 100 after a low of 99.65 yesterday. An increase in commentary by Japanese officials on the yen's strength has created skittish price action in a market fearful of intervention. 

GBP broke higher through the resistance levels yesterday following very strong retail sales data. The short positioning and negative sentiment in GBP may mean more sterling strength in the near term as positioning is reduced.

EUR remains below the key resistance level of 1.14, but trades bid in line with general USD weakness.

In emerging markets, USD weakness was less pronounced than in G10 as a number of currencies trade on key support levels and need a fresh catalyst to break these (SGD, CNH, INR). Others, after a prolonged bout of strength saw large sells offs earlier in the weak and remained quiet yesterday failing to participate in the general USD weakness (KRW, TWD).

Foreign exchange movements
  -      Following the prior days selling of ATM USD elections vol, buys re-emerged yesterdays, looking to hedge the election risk.

-      Buyers were also seen buying vol in USDJPY around the BoJ 21 September meeting date following comments from Abe’s advisor Honda yesterday that he sees “bold” action from the BOJ in September.




- Moody’s cut its outlook on Aussie banks ANZ, CBA, NAB and Westpac to negative from stable, saying low wage gains and interest rates are pressuring profit growth. It also cited concern over exposure to tail-risks in housing.
-      China's lenders are being left in the dark about zombie companies. Several provinces are withholding lists of state-owned companies deemed too weak to survive from banks for fear that they’d cut financing immediately, officials said.


-      US Treasuries ultimately edged higher, boosted by a strong five year TIPS auction.  The two-year note yield lost 2bps to 0.705%. The 10-year bond yield is lower by 1.5bps to 1.534%.
-      German 10-Year Bonds rose, With Yield Falling to -0.077 Percent. Spain-Germany 10-Year Yield Spread Drops Below 100 Basis Points, first time since Apr 2015. as a meeting between the People’s Party and rival Ciudadanos next week boosts optimism the nation’s seven-month political deadlock may be approaching an end. 


US stocks continued to grind higher, supported by further strong gains in oil and a better-than-expected profit result from Wal-Mart.

The Dow Jones Industrial Average tickled up 23.76 points to 18,597.70. The S&P 500 added 0.2%, to 2,187.02 with energy leading the way (+1.8%). The Nasdaq firmed 0.2%, to 5,240.14.

Wal-Mart Stores Inc. rose by 1.9% after reporting adjusted Q2 EPS of $1.07 better than the market estimate : $1.02, and revenue inched up 0.5% to $120.85bln better than the market's estimate at $120.16bn.

Private prison operators Corrections Corporation of America and GEO Group slumped 35% and 40% respectively following a report in The Washington Post that stated the U.S. Justice Department plans to end the use of private prisons.

M&A: Regional bank United Bankshares Inc. (+0.2%) confirmed it will buy Cardinal Financial Corp. (-2.6%) for about $912mln in stock equivalent to 7.2% premium over Tuesday's closing price, in a push to expand in the Washington, D.C., metro area.

European stocks closed higher for the first session in five led by strength in industrials, energy and materials. The STOXX 600 index recouped 0.7%, to 342.91. In London the FTSE 100 tickled up 9.81 points to 6,686.96, after the Office for National Statistics reported better retail sales in July.

Danish wind turbine maker Vestas Wind spiked 9.9% after it reported stronger-than-expected Q2 operating profit and raised full year forecasts.

Home improvement retailer Kingfisher rallied 1.9% after reporting a 3% increase in Q2 comparable sales and said that it had seen no impact yet from the Brexit vote.

Asia Pacific Stocks

Japan highlights

-      Mitsubishi Corp. (8058 JP): To raise 200b yen from hybrid bonds: Nikkei
-      Kirin (2503): Looks to double U.S. beer sales bolume by 2021: Nikkei
-      Toshiba Medical Joins Bidding for Takeda Chemical Unit: Nikkei

South-east Asia highlights

-      Philweb (WEB PM): Philippine gaming agency rejects Ongpin’s PhilWeb stake Offer
-      Singapore Airlines (SIA SP): CFO Stephen Barnes on medical leave for about a month
-      Masan (MSN VN): To buy back up to 20m shares, or 2.64% stake

Information source: Bloomberg
The Fed's William Dudley has emphasised jobs over GDP in his latest comments. Photo: iStock
 – Edited by John Hampshire

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. Follow us on @SaxoStrats on Twitter

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