Article / 07 September 2016 at 2:11 GMT

Morning Report APAC: Gold reclaims $1350, Sep rate hike less likely

APAC Sales Trading Desk / Saxo Capital Markets

  • Gold jumped to its highest level in three weeks
  • The US ISM Non-Manufacturing index fell to 51.4 from 55.5, well below expectations
  • USD tumbled, Treasury yields were lower and the chance of a Sep rate hike fell
  • USDJPY traded to a low of 102 and selling pressure continues 


By Saxo APAC Sales Trading




0915: USD – Federal Reserve’s John Williams speaks on economic outlook in Reno, Nevada

2115: GBP – Bank of England’s Mark Carney, Jon Cunliffe, Kristin Forbes, Ian McCafferty speak in London

Overnight news

US:  The US Federal Reserve's labour market conditions index declined in August by 0.7%, which may give some Fed officials pause post the weaker-than-expected NFP data last week. 

ISM Non-Manufacturing data had a sharp fall to 51.4 from 55.5 last month, well below the 54.9 expectations. This saw USD tumble post-release, Treasury yields lower and September hike probabilities paired. 

Europe:  Europe's GDP came in line with expectations and prior at 1.6% y/y. 

German Retail PMIs improved further to 54.1, up from 52.0. However, factory orders declined y/y by 0.7%, below expectations. 

The rest of European retail PMIs showed strength, with the exception of Italy which was a notable outlier at 43.2, firmly in contractionary territory but up from prior month.




USD thumped across the board post the weak US data, USDJPY traded to a low of 102 in the US session and that selling pressure continues through into the Asian morning, trading below 101.5. 

The selling was broad-based, with all currencies trading stronger against the USD.

Emerging Markets tracked the USD moves with strong performance across the board. Carry trades remain the best performers as investors continue to seek out yield.

Foreign exchange movements


Volatilities all caught a bid post US data in line with the spot moves. This continues into the Asian session this morning.


Treasury yields tumbled after the services side of the US economy grew in August at its slowest pace since 2010, suggesting the Federal Reserve might be forced to stand pat on interest rates in the near future. 

The market is pricing only a 24% chance of a rate hike in September and 51.8% in December.




US markets broadly rallied and the Nasdaq created a new high yesterday to suggest that the equities rally could continue as a rate hike in the FOMC meeting in September is most likely to be off.

The Dow Jones industrial index was up 46 points or 0.25% to 18538. S&P 500 saw similar gains and was up 6 points or 0.3% to 2186.48. Nasdaq was the best performer as it gained 26 points or 0.5% to 5275.91. 

European markets were mainly in the red, with only the German Dax up 0.14% and closed at 10687.14. FTSE 100 was one of the biggest losers, declining 0.78% and closing at 6826.05.

Bayer increased its bids for Monsanto yet again to $127.5 per share after initial $122.5 and $125 bids were rejected. Bayer and Monsanto are in advance talks but Monsanto is also believed to be weighing Bayer's new bid along with proposals from other parties and collaboration as well. 

Shares of Monsanto, however, closed lower to 106.07, down 1.28%.

Asia Pacific stocks

Greater China highlights
  • China Vanke (2202 HK): Henderson Fund sells London property to Vanke: Property Week 
  • Evergrande Cinema (3333 HK): Expanding in China: Red Pulse 
  • Sanlian Commercial (600898 CH): Plans to buy Zhejiang Dejing for 800m yuan 

Japan highlights
  • Adastria (2685 JP): First-half operating profit 7.5bn yen vs company forecast 8.1bn yen, Nikkei says 
  • McDonald’s Japan (2702 JP): August same-store sales up 15.9% y/y 
  • Seiko Epson (6724 JP): To begin discussions on restructuring Orient Watch subsidiary 

Southeast Asia highlights
  • CIMB (CIMB MK): Gets bank operating license in Vietnam 
  • Singapore Exchange (SGX SP): Sets up working group to assess, improve securities market 
  • Nava Nakorn (NNCL TB): Says its operation unaffected by transformer fire 

Source: Bloomberg


 Gold is expected to strengthen further, with $1,350 a good support level. Photo: iStock


– Edited by Susan McDonald

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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