Article / 11 July 2016 at 1:52 GMT

Morning Report APAC: Robust nonfarm payrolls fails to lift US dollar

APAC Sales Trading Desk / Saxo Capital Markets
  • Precious metals initially sold off after the release of the NFP report
  • But these metals later rallied, especially silver, boosting gold and platinum
  • Copper tumbled on concerns about flagging demand in China 
  • WTI edged higher on better than expected nonfarm payroll data for the US

By Saxo APAC Sales Trading

Economic data of the day (Singapore Time)
2015: CAD – Housing Starts MoM (Exp. 189k, Prev. 188.5k)

2200: USD – Fed's Esther George Speaks in Lake Ozark, Missouri

Overnight news

United States

  • US jobs rebounded strongly in June to 287,000 (Expected: 180,000). May was revised down to 11,000 from 38,000. The leisure and hospitality sector gained 59,000 jobs, the most in 1½ years. Temporary-help jobs rebounded 15,200. Healthcare and social assistance payrolls leapt 58,400.
  • The return of 35,100 Verizon workers, who were excluded from May's payroll count while on a month-long strike, lifted information sector employment. The government added 22,000 jobs.
  • The unemployment rate increased to 4.9% (Market est: 4.8%) from 4.7%. That uptick was largely due to a rebound in the size of the workforce, one that saw the labour force participation edge up to 62.7% from 62.6%.


  • Chinese consumer inflation decelerated during June. The National Bureau of Statistics reported Sunday that the Consumer Price Index increased 1.9% YoY (Mkt est: +1.8%), a tad slower than May (+2.0%).
  • The Producer Price Index contracted 2.6% YoY (Market est: neg-2.5%) having fallen 2.8% in May.


  • Prime Minister Malcolm Turnbull has finally claimed victory in the July 2 federal election after more than a week of counting. The ABC reports that the Liberal National Coalition has won 74 seats and is predicted to win two more. That would give the government the 76 seats needed for majority rule. Three independents have said they will support the Coalition on supply in the event that the government does not achieve a majority. Results in the Senate are still likely to be some weeks away.


  • Prime Minister Shinzo Abe’s LDP coalition won a convincing victory in an upper house election on Sunday. Broadcaster NHK is projecting that the governing coalition, plus lawmakers in favour of changing the Constitution, will occupy two-thirds of the upper house. The government currently controls two-thirds of the lower house.
  • The super majority would allow the Diet to seek amendments to the Constitution. This hasn’t been amended since it was first enacted in 1947. Abe has talked in the past about amending Article 9. This act sets out strict conditions for Japan’s use of Military force. Any amendment to the Constitution must be voted on by the people in a referendum.


Foreign exchange


In a counterintuitive move, the US dollar first rallied and then completely reversed, especially against emerging market currencies. DXY finished slightly higher but the move is small given the strong nonfarm payrolls report.

The two biggest movers were the Australian and New Zealand dollars on the back of higher commodities and overall risk on after the release of NFP report.

As mentioned above, the beneficiary of the rally in equities were emerging market currencies such as USDBRL, down 2%, USDSGD again below 1.3500 and USDMYR below the 4.0000 level.


There are some buyers of AUD upside with the spot getting closer to 0.7600 again. Few funds like to sell AUD at this level with a stop above 0.7600

NZD and AUDNZD Vols are bid for the August 8 date, which is rate decision day for the RBNZ. The market expected a cut to 2.00% from 2.25%, but the comment from RBNZ stating that they were concerned about the property market could prevent them from cutting rates



US 10 year treasury yields initially jumped from 1.39% to 1.44% following the release of the nonfarm payrolls data, but quickly retraced and ended the day lower at 1.36%. This provided further evidence that the demand for bonds are so much that it is hard to see a sell off recently. With better payrolls data emerged on Friday, market pricing of February increased, implying a 10% chance of a rate hike in September, a 25% chance by December

German 10-year bund yield fell two basis points on Friday to -0.19%. Yields on Bunds fell to a record low this week along with those on French and Dutch sovereign-debt treasuries amid speculations the European Central Bank will loosen monetary policy further in coming month following the ‘Brexit’ vote.

The market is pricing in a higher probability of a rate cut in UK; there is a 63.5% chance of a cut following the Bank of England's July meeting and an 80.6% probability at its August meeting. 







The Dow Jones Industrial Average rallied 250.86 points, or 1.4% to 18,146.74, reversing all its previous losses suffered from the "Brexit" vote selloff. The S&P also surge 32 points and was trading at its record high at 2131.71 before closing at  2129.90. The Nasdaq composite index also leapt 79.95 points or 1.6% and closed at 4956.76.

In Europe, risk-on sentiment also mirrored as the London FTSE 100 climbed 56.85 points or 0.9% to 6590.64 - its highest level in nearly a year.

In the US market, Polycom shares surged nearly 13% and Mitel popped nearly 20% on Friday as it thwarted a three-month deal it had made with the Canadian telecom firm, and agreed to be bought by Sirus Capital Group. Polycom was up 12.7% on Friday and closed at $12.25.

Danish telecommunications company TDC surged 9.2% after it rejected a preliminary takeover approach from US private-equity firm Apollo Global Management.

Hong Kong equities preview

Analyst views

  • China Comm Cons (1800 HK): Raised to outperform at Daiwa Securities.
  • Kingboard Lam (1888 HK): Rated new buy at Everbright Secs.

Company news

  • China Unicom (762) Telefonica sells co’s stake of about 361.8mln shares at $HK7.80/share, upon completion Telefonica retains ~1% stake in company.
  • ABC(1288) plants to sell RMB3.064b of bad-loan ABS (Caixin)
  • Future Land (1030) issued positive profit alert, expects H1 net to rise more than 30% YoY
  • Yuexiu ppty (123) buys land in hangzhou city for 986mln yuan.
  •  Haitong Sec (6837) Jun net profit +157.4%MoM to 871mln yuan.
  • HTSC (6886) Jun net profit +83.7% MoM to 580mln yuan.
  • CITIC SEC (6030) Jun net profit 1.3bn yuan.
  • Zijin Mining (2899) proposed for non-public issue of up to 1.553bn A shares to no more than 10 specific targets to raise up to 4.8bn yuan.
  • China Mobile (941) and China Tower finalise tower asset leasing terms
  • VP (806) issued a profit warning, expecting six months ended June 16 profit to be less than $HK5mln vs a profit of $HK446mln last year.
  • Fosun Pharma (2196) approved to sell up to 99.1mln A-Shares in placement.
  • China State Con (3311) 1H16 new contract value of about $HK43.0bn, achieved a 55.1% completion of the full year target of 2016.
  • New World China (917) to withdraw listing from stock exchange from August 4.
  • Longfor ppty (960) January to June contracted sales +78.3% YoY to 38.6bn yuan.
  • Far East Global (830) H1 new contract + 21.3% YoY to HK$1.85b, accomplished a 61.7% completion of full year target.
  • HK Ppty: existing home px -0.46%WoW (Centaline).
  • KWG ppty (1813) Jun pre-sales value -7.9%MoM and -2.2%YoY to RMB1.94b while 1H16 pre-sales value RMB11.4b, fulfilling 52% of yearly target.
  • Chinares Cement (1313) issued profit warning, expecting interim net profit to tumble
  • Coolpad Group (2369) issued profit warning, expecting a loss of $HK2.05bn for six months ended June 16, vs  net profit of $2.843 bn last year.
  • Town Health (3886) issued profit warning, expecting half year profit to dive.
  • CH Child Care (1259) issued a profit warning, expecting net profit for six months ended June 16 to decline approximately of 50%-60% YoY.
  • CRCC (1786) GIC private sold 4.2m CRCC H-shrs at an average of $HK3.42 each.

Japan equities preview

Analyst views

  • Asahi Kasei (3407 JP): Rated new neutral at Iwai Cosmo.
  • Bank of Kyoto (8369 JP): Raised to outperform from neutral at Credit Suisse.
  • Japan Real Estate Investment (8952 JP): Raised to neutral from underperform at Mizuho.
  • Japan Retail Fund (8953 JP): Raised to buy from neutral at Mizuho.
  • Kusuri No Aoki (3398 JP): Cut to neutral from neutral plus at Iwai Cosmo.
  • Mitsubishi Chemical (4188 JP): Downgraded to neutral from outperform at Iwai Cosmo.
  • Nomura Holdings (8604 JP): Cut to equal weight from overweight at Morgan Stanley MUFG.
  • Seven & i (3382 JP): Raised to outperform from neutral plus at Iwai Cosmo.
  • Showa Shell (5002 JP): Raised to buy from hold at Jefferies.
  • Sumitomo Riko (5191 JP): Rated new outperform at Tokai Tokyo.

Company news

  • Line IPO pricing to be announced
  • Chiyoda Co. (8185 JP): Q1 operating profit -13% to ¥3.41bn; to buy back up to 2.64% of shares for as much as ¥2bn.
  • FamilyMart (8028 JP): Q1 operating profit -5.9% to ¥10.5bn.
  • Hisamitsu Pharmaceutical (4530 JP): Q1 operating profit little changed y/y at ¥5.74bn.
  • Meiko Network (4668 JP): Cuts full-year oper. profit forecast 23% to ¥2.23bn.
  • Onward Holdings (8016 JP): Q1 operating profit +12% to ¥4.94bn.
  • Plenus (9945 JP): Q1 operating profit -35% to ¥1.23bn.
  • Shimachu (8184 JP): 9-month operating profit +8.9% to ¥8.37bn.
  • Showa Shell (5002 JP): Raised to buy from hold at Jefferies
  • Wakita (8125 JP): Q1 operating profit -32% y/y to 1.62b yen, cuts FY forecast 23% to ¥2.7bn.
  • Yoshinoya (9861 JP): Q1 operating profit -58% to ¥151mln.

Australia equities preview

Analyst views

  • Iluka Resources (ILU AU) Raised to ’Neutral’ at JPMorgan

Company news

  • Warrnambool Cheese (WCB AU) - AGM
The conservative Australian national government, which meets in Canberra (above), has been returned with a much reduced majority, raising concerns about fiscal stability. 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

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