Article / 20 May 2016 at 2:32 GMT

Morning Report APAC: Crude gains ground on easing in US dollar rally

APAC Sales Trading Desk / Saxo Capital Markets
  • June is definitely a" live" meeting in terms of rate decisions, says a Fed speaker
  • A yes Brexit vote may prompt a Fed pause in hiking rates
  • Equity markets generally weakened as investors reacted to Fed commentary
  • US jobless claims fell to just 278,000 from 294,000 in the previous reading
  • Precious metals continue to drop, and silver was the main metal to move lower
  • Oil rallied on easing in the USD rally and news about Nigeria’s oil industry
  • Bank Indonesia and Bank Negara Malaysia kept their rates on hold.

By Saxo APAC Sales Trading

Economic data of the day (Singapore Time: GMT plus 8 hours)

1200: MYR – CPI YoY (Est. 2.1%, Prev. 2.6%)
1400: EUR – Germany PPI MoM (Exp. 0.1%, Prev. 0.0%), YoY (Exp. -3.0%, Prev. -3.1%)
2030: CAD – Retail Sales MoM (Exp. -0.6%, Prev. 0.4%), Ex Autos MoM (Exp. -0.4%, Prev. 0.2%)
2030: CAD – CPI NSA MoM (Exp. 0.3%, Prev. 0.6%), YoY (Exp. 1.7%, Prev. 1.3%)
2030: CAD – CPI Core MoM (Exp. 0.1%, Prev. 0.7%), YoY (Exp. 2.0%, Prev. 2.1%)
2030:: CAD – GDP MoM (Exp. 0.1%, Prev. 0.3%), YoY (Exp. 1.0%, Prev. 0.8%)
2130: CAD – Quarterly GDP Annualized 3Q (Exp. 2.3%, Prev. -0.5%)
2200: USD – Existing Home Sales MoM (Exp. 1.3%, Prev.  5.1%)


2100: USD – Fed's Daniel Tarullo Speaks in Washington

Overnight news

  • US: Initial jobless claims fell to 278,000 in the week ending May 14 (previous: 294,000), broadly in line with expectations of 275,000
  • Philadelphia Fed Business Outlook dropped to -1.8 (Exp. 3.0) showing sluggish factory activity in the region
  • INDONESIA: Bank Indonesia stays on hold but leaves door open for further easing (Bank Indonesia Lending at 7.25%, Deposit, 4.75%, Reference Rate at 6.75%, 7D Reverse Repo at 5.50%)
  • MALAYSIA: BNM is on hold at 3.25% with a more neutral tone under new governor

Fed speeches: There were a few Fed speakers again last night. New York Federal Reserve President William Dudley said:

  • "To reiterate what some of my colleagues have said, June is definitely a live meeting depends on how the economy is going to evolve.
  • "If I get convinced that my own forecast is sort of own track, then I think tightening in the summer, with a June or July frame, is really a reasonable expectation
  • "It's really a question of whether the economy cooperates in terms of my personal expectations."
  • "Looking at the market expectations, it looks like June is roughly one-third of a percent and a tightening through the July meeting looks like about 60% in Fed funds futures market
  • "Clearly looking back a few days ago I think there's a pretty strong sense among FOMC membership that the market was not putting a sufficient probability in June or July meeting quite pleased" to see the probability of a rate hike rising

Richmond Federal Reserve President Jeffrey Lacker said that the case for a June rate hike is pretty strong:
  • "My sense of things is that markets took the wrong signal from us pausing in March and April. Their interpretation was that the threshold for pause was fairly low, and I think they set it too low"
  • "If prospects looked uncertain enough and the direct expected consequences [of a yes Brexit vote] looked problematic enough, I might be persuaded to pause and wait until July"
Federal Reserve Vice Chairman Stanley Fischer said:
  • "What we need most, now that we are near full employment and approaching our target inflation rate, is faster potential growth"

Foreign exchange


The Fed minutes effect slowed down overnight with a temporary stop in the USD rally. We actually saw some profit taking ahead of the week-end in emerging market currencies such as USDSGD and USDKRW for example. 

The GBP continued to outperform following the recent poll from Ipsos Mori showing 47% in favour of staying in the European Union vs 41% to leave.

The Australian dollar confirmed the break below the 200 day moving average (0.7258) and should become the initial resistance for the time being.

As usual, USDCNH back end vols are still bid on the back of hedge funds buying upside even though the local banks are still selling the forwards.

Following the break lower in the Australian dollar, there are buyers of AUD gamma with no specific direction noted.



Treasury yields initially declined as Fed Vice Chairman Stanley Fischer was silent on June, then pared losses as New York Fed president William Dudley confirmed that the meeting will be a "live" one in decision-making terms; 10 year down 1 basis point to 1.85%.

The US auction of $11 billion in 10-year Treasury Inflation-Protected Securities is expected to draw a yield around 0.270% according to the average forecast of four of the Federal Reserve’s 23 primary dealers.







Equity markets have generally weakened over the past 24 hours as investors have reacted to the Fed commentary and priced in the increased likelihood of a summer Fed rate hike. The S&P500 end 0.5% lower for day, but well off the lows after being down 1.1% during the morning.

However, surprisingly upbeat results out of Walmart (up 9.5%) failed to counter the narrative that the Fed is now poised to move in June. After the close, Gap reported in line with expectations but announced it would close 75 international stores, including 53 Old Navy locations in Japan.



Bank Indonesia and Bank Negara Malaysia kept their rates on hold. Adding to that a better expectation of a rate hike in the US are triggering outflows in the bonds markets in these two southeast Asian countries pushing the CDS indices higher.

The fear of debt for China is still in the mind of the major funds globally which also supports the CDS market

Hong Kong equities preview

Analyst views

  • China Resources Power (836 HK): Raised to buy at UBS.
  • Cosmo Lady (2298 HK): Rated new buy at Haitong.
  • Datang Intl Power (991 HK): Cut to sell at UBS.
  • Huaneng Power (902 HK): Cut to sell at UBS.
  • Shanghai Fosun Pharma (600196 CH): Assumed buy at Jefferies.
  • Soho China (410 HK): Rated new sell at Haitong Intl.
  • Yuexiu Property (123 HK): Rated new buy at China Merchants Securities.

Company news

  • BOC (3988) is planning to sell ~301mln yuan of its debt through bonds backed by non-performing assets, first bad loan securitization Since 2008.
  • HSBC (5) plans to close down six of its 13 branches in Bangladesh this year as part of its business strategy (New Age).
  • Kingsoft (3888) Q1net income +16.9% YoY to 133.8mln yuan.
  • ZTE (763) HKEX allows ZTE's ZTEsoft, a non-wholly owned subsidiary, to list on new third board.
  • China Unicom (762) Apr 4G net additions -3% MoM to 4.38m while mobile billing subscribers net additions -45% Mom to 609,000
  • CSCL (2866) to subscribe to Kingray’s new share with 1.5bn yuan.
  • Parkson Group (3368) Q1 net loss narrowed to just 17.8mln yuan, against a loss of 27.3mln yuan last year.
  • Anta Sports (2020) Q4 order value of co’s branded products sees low double-digit growth YoY.
  • China Environmental Energy(986) entered into agreement to sell 93.33% stake in Ideal Holding Co, which mainly engaged in recycling business, for $HK150m.
  • TCL (1070) to form strategic cooperation with Elaraby, the largest home appliance enterprise in Egypt.
  • Poly Ppty (119)’s unit to form joint venture with related co Shandong Heshun to develop a land project in Jinan on a 70:30 basis and target injection of a total of 160mln yuan.
  • Genclore (805) CEO says ’hopefully’ this year is better than 2015 and company is prepared for current or even lower commodity prices.
  • Cogobuy (400) Q1net profit +19% YoY to 85.1mln yuan.

Japan equities preview

Analyst views

  • Disco (6146 JP): Cut to neutral from neutral plus at Iwai Cosmo.
  • Hitachi High-Tech (8036 JP): Rated new buy at Jefferies.
  • Mitsui (8031 JP): Raised to neutral at Goldman.
  • Musashi (7521 JP): Cut to neutral from buy at Ichiyoshi Research.
  • Resona (8308 JP): Raised to outperform from market perform at Keefe, Bruyette & Woods.
  • Ricoh (7752 JP): Raised to neutral at Mitsubishi UFJ-MS.
  • Ricoh Leasing (8566 JP): Credit rating cut to A- from A at S&P.
  • Screen (7735 JP): Rated new hold at Jefferies.
  • Shiseido (4911 JP): Raised to buy at Haitong.
  • Sumitomo (8053 JP): Cut to sell at Goldman.
  • Teijin (3401 JP): Raised to buy at Nomura.
  • Tokuyama (4043 JP): Raised to hold from underperform at Jefferies.
  • Ushio (6925 JP): Cut to neutral from overweight at Mitsubishi UFJ Morgan Stanley.

Company news

  • Hitachi High-Technologies (8036 JP): Rated new buy at Jefferies, PT ¥4,000.
  • Kayac (3904 JP): To split shares two-for-one on July 1.
  • Mitsubishi Motors (7211 JP): MUFG raises stake in co. to 7.23% from 6.19%.
  • Sekisui Plastics (4228 JP): To conduct 1-for-2 reverse split October 1.
  • Shidax (4837 JP): Preliminary full-year net loss ¥7.12bn vs co. forecast ¥1.5bn loss
  • Shinkin Central Bank (8421 JP): Full-year net income ¥42.8bn versus ¥42bn co. forecast; targets ¥39bn for current fiscal year.
  • Sinanen Holdings (8132 JP): To conduct one-for-five reverse split October 1.
  • Wellnet (2428 JP): To split shares on a two-for-one basis on July 1.

Australia equities preview

  • Mantra Group (MTR AU) raised to buy vs hold at Bell Potter.
  • James Hardie (JHX AU) cut to sell vs neutral at Citi.
  • Metcash (MTS AU) raised to outperform at Credit Suisse.

Source: Bloomberg / CIMB


 Crude prices gained ground on easing in the US dollar rally and news about Nigeria’s oil industry. Photo: iStock

– Edited by Robert Ryan

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

Please contact us for any market updates. Global Sales Trading: +65 6303 7818

  • Christopher Moltke-Leth -
  • Lakshmi Thurai -
  • Tareck Horchani -
  • Edmund Liu -

Global Macro Strategist: +65 6303 7622

  • Kay Van-Petersen -

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