Article / 04 January 2016 at 1:35 GMT

Morning Report APAC: New year starts with busy data week, tensions

APAC Sales Trading Desk / Saxo Capital Markets

  • China's manufacturing PMI came in at 49.7, below expectations
  • But China's non-manufacturing PMI picked up to a robust 54.4 in December
  • Xi Jinping says stimulus steps are not the solution to China's slowdown
  • The gold price has spiked over tension in the Middle East


By Saxo APAC Sales Trading

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

  • 0800: SGD – GDP SAAR QoQ (Exp. 1.0%, Prev. 1.9%), YoY (Exp. 1.2%, Prev. 1.9%)
  • 0945: CNY – Caixin China PMI Manufacturing (Exp. 48.9, Prev. 48.6)
  • 1130: THB – CPI Core YoY (Exp. 0.76%, Prev. 0.88%), NSA MoM (Exp. -0.34%, -0.32%, Prev. 0.1%), YoY (Exp. -0.8%, Prev. -0.97%)
  • 1650: EUR – Markit France Manufacturing PMI (Exp. 51.6, Prev. 51.6)
  • 1655: EUR – Markit Germany Manufacturing PMI (Exp. 53.0, Prev. 53.0)
  • 1700: EUR – Markit Eurozone Manufacturing PMI (Exp. 53.1, Prev. 53.1)
  • 2100: EUR – Germany CPI MoM (Exp. 0.0%, Prev. 0.1%), YoY (Exp. 0.6%, Prev. 0.4%)
  • 2230: CAD – RBC Canadian Manufacturing PMI (Prev. 48.6)
  • 2245: USD – Markit US Manufacturing PMI (Exp. 51.1, Prev. 51.3)
  • 2300: USD – ISM Manufacturing (Exp. 49.0, Prev. 48.6), ISM Price Paid (Exp. 36.0, Prev. 35.5)

Overnight news

  • China: On January 1, China released its PMI figures. The Manufacturing PMI came in at 49.7 (Exp. 49.8) and the Non-Manufacturing PMI rose from 53.6 in November to 54.4 in December, which is also the highest release in 2015. President Xi Jinping said that China will face increasing challenges over the next five years for which strong stimulus to boost development is no longer the solution.
  • US:  Chicago area PMI released December 31 dipped to 42.9 with an expectation of 50.0. Watch today the release of the ISM Manufacturing for the US at 2300 Singapore time.
  • Singapore:  Singapore economy expanded 2% YoY more than expected as services and construction provided supported to slow exports and manufacturing. GDP QoQ rose 5.7%, which was much more than expected (Exp. 1.7%). 

Foreign exchange



Despite a dip of the DXY index early December, we continued to trade above the 200 day moving average. We start the year close to the highs of 2015 and should expect strong support in the USD buying for the time being. The euro couldn’t break the resistance at around 1.1050 and new selling interest appeared toward the end of the month. The short term support is at 1.0825 and a break below could open the door for a deeper break toward 1.0500.
After the big drop early December, the USDCHF was able to hold above the 100d MA and is not back at parity. We should see the interest to buy the currency pair on hold and target the high of 2015 at 1.0335

In emerging markets, the big mover in December was CNY with the Peoples' Bank of China allowing the fixing to move higher after the inclusion of the currency in the SDR. The USDCNY moved from 6.4300 to 6.5800, with a brief break of 6.6000. The China PMI manufacturing release today should give a better direction for the start of the year with a bias to buy USDCNY on dip.
Despite the strong release of the SGD in Singapore this morning, the USDSGD is following the rest of Asia, with a strong bas to buy USD.

Vols in JPY have continued to dip toward the end of 2015, but expect to see all the vols well supported this week with the series of the global data that will end with the NFP numbers on Friday.



Rates traded within tight range on Friday’s session with shortened New Year’s Eve trading session. The two year US treasury yield fell by 1 basis point; while the 10 year bond yield eased by 7 bps to 2.269%. Overall the front end yields are backing away from its highs, with oil prices still generally under pressure, global risk appetite waned and an underwhelming $29 million 7 year note auction that occurred earlier last week on Wednesday.

It’s interesting to see the 10yr UST trading only at 2.27% with the Fed starting to hike rates (remember economists were expecting a range of 3.5% to 3.8% when we first started to talk about possible Fed hikes end of 2014). There is definitely room to move much higher if the US economy continues to expand. The counterbalance of this will be how much the Chinese economy is slowing this year and the global economy outside the US






Europe’s benchmark stock index was lower last Thursday, closing out 2015 with a fourth straight yearly advance. The annual rise marked the index’s fourth consecutive year of advances, the longest winning streak since 2006. Britain's FTSE 100 lost 0.5% on Thursday, while for 2015 the benchmark dropped 4.9%, drastically underperforming most of Europe due to its heavy exposure to commodity markets. The FTSE’s performance marked its second straight year of losses and its worst performance since 2011.

In the US, the S&P 500 lost its grip on a fourth consecutive annual gain in the year’s final trading session, as technology shares led a decline paced by Apple Inc. Apple fell for the fourth time in five days to extend its 2015 retreat to 4.6%, its worst since 2008. The year’s last day featured seesaw moves as energy producers advanced after oil erased an earlier drop, though the group capped its biggest annual retreat in seven years.
In Asia, expect equities to be under pressure from growing tension in the Middle East. 



Asian CDS continue to show good support and with the USD bid against most Asians currencies, expect the trend to continue for the time being

Company news

Hong Kong

  • China Vanke Co Ltd (2202 HK) denies meeting with Anbang, Baoneng.
  • China copper producers said to plan 200,000 tonne cut in Q1 sales.
  • Shandong Shanshui Cement (Shashu Corp) may fail to repay bonds. Company “basically” can’t repay 3-yr bond due Januar 21, 2016 due to its tight financial positions, the company says in statement to, a website of the China Foreign Exchange Trade System.
  • China Railway Const. (1186 HK): Wins 40 billion yuan contracts.
  • CRRC Corp. (1766 HK): Signs 41.4bn yuan of contracts November-December.
  • ZTE (763 HK): Targets annual sales of 200bn yuan by 2020.
  • NDRC announced new coal power tariff pass-through mechanism, effective January 1, 2016: Different from the previous policy, the new policy provides more details for coal power tariff adjustment.


  • Fujifilm (4901): GE, Kohlberg Kravis Roberts may join Fujifilm as candidates to acquire majority stake in Toshiba Medical Systems, says Kyodo. Sankei. Reports Hitachi (6501) is considering a bid as well.
  • Dowa (5714): Two workers died after a tank burss at high-tech plant near Tokyo. Police are investigating the cause of the blast.
  • Toshiba (6502) INCJ in talks with company on specifics of an aid plan, says Nikkei. Plan may involve combining Sharp's (6753) home appliance biz and restructuring Toshiba's nuclear operations. Plan said to be unveiled by March.
  • Panasonic (6752) will invest several billion yen to help develop a smart-city in Denver outskirts.
  • Honda (7267) confirms ninth fatality caused by Takata (7312) air bag. Accident occurred on July 22 near Pittsburgh, US.
  • Three F (7544) and Lawson (2651) to delay agreement on capital alliance. Three F cuts full-year forecasts to losses from profits.
  • Mitsui & Co (8031): CEO Yasunaga says co seeks to buy distressed energy assets that small, midsize companies may seek to sell according to interview with the FT.
  • ANA (9202) to order 3 Airbus A380s, worth about ¥150bn to be introduced in FY18 in routes to Hawaii and elsewhere.
  • Dai-ichi Life (8750) may raise profit forecast, says president Watanabe in an interview with Bloomberg.

Source: MS and CIMB




Precious metals spike ... the vulnerability of commodities to politics is evident today, with Middle East tensions pushing up the price of gold and silver, with oil likely to follow. Photo: iStock

– Edited by Robert Ryan

Happy New Year 2016 from all the Saxo Sales Trading team. We wish you all the best for this year. 

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