Article / 31 August 2016 at 2:28 GMT

Morning Report APAC: US consumer confidence at highest level in a year

APAC Sales Trading Desk / Saxo Capital Markets

  • US consumer confidence rises to highest in a year at 101.1 versus 97 expected
  • Fed's Stanley Fischer talks about global negative rates and the US dollar
  • USD finds firmer footing and rallies throughout the day 
  • Oil falls on renewed uncertainty over output freeze deal 


By Saxo APAC Sales Trading




0900 – AUD –RBA’s Guy Debelle Gives Speech

0930 – JPY – BOJ board member Yukitoshi Funo speech 

1515 – USD – Fed’s Charles Evans Speaks on Economy and Policy in Beijing 

2000 – USD – Fed’s Neel Kashkari speaks on Feb Structure in St. Paul 

1400 – EUR – ECB’s Francois Villeroy speaks at conference in Frankfurt

Overnight news

US:  Consumer Confidence overnight rose to its highest level in a year at 101.1 versus 97 expected. This is another print where the data has beaten estimates and shows again that US growth remains on firm footing. As we get into the second half of the week the data becomes more important and will determine whether the Fed raises rates in September or December. 

Headlines from the Fed’s Stanley Fischer’s interview on Bloomberg TV focused on the conversation about negative rates and his view on the efficacy of them as a policy tool internationally. Fischer spoke briefly about the USD and how it isn’t the Fed’s biggest concern. He also commented on the much photographed walk of Janet Yellen, Fischer and Dudley at Jackson hole as symbolism to demonstrate united thinking among the most powerful members of the Fed.

Europe:  German inflation data slowed with the harmonized m/m CPI number coming in at -0.1%, which will not please what has been a very quiet Mario Draghi. 

Eurozone consumer confidence and economic confidence also slowed in the month.


After opening initially soft in the early Asian hours yesterday, the USD found firmer footing and rallied throughout the day and into the New York close, with USDJPY rallying nearly 140 points steadily throughout the day from its lows to close above its 50-day moving average.

EURUSD traded similarly to the USDJPY, closing within putting distance of its 200 DMA, a break of which sets the sights on 1.10 thereafter.

From this week’s Macro Monday call, it was highlighted that positioning in long USD was paired back pre-Jackson Hole. This would indicate that we may see more USD upside as the market moves to re-establish positioning as the USD continues to rally. 

Emerging Markets traded broadly weaker in line with the USD move, although it should be noted that while the USD was stronger not all EM currency moves were of the same magnitude. With the likes of MXN, ZAR and TRY underperforming INR, THB and CNH, admittedly the relative volatility of these currencies aren’t one for one, the picture that may be developing in the EM currency world is one where we may see increasing divergence in relative performance as domestic fundamentals play a bigger driving role.

Foreign exchange movements


 The overall picture is that volatilities are holding firmly and there is decent demand for USD calls.


US Treasury prices ended little changed on Tuesday, yields pared an earlier advance following hawkish comments by Federal Reserve Vice Chairman Stanley Fischer.



US stocks retreated with all three indices closing in the red. The Dow Jones Industrial index is down 48.69 (0.26%) as it challenged the 18,500 key resistance level on open, but eventually closed at 18,454.3.

The S&P 500 and Nasdaq traded in similar fashion, S&P 500 down 0.20% or 4.26 before closing at 2176.12, while the Nasdaq shed 9.34 points or 0.18% and closed at 5,222.99. 

European stocks did fairly well with both DAX and the CAC 40 Index outperforming the pan-European benchmark with gains of 1.07% and 0.75% respectively. 

Apparel stores giant Abercrombie & Fitch Co. (down 20.3%) gapped down and eventually closed 20 points lower to $18.29 on heavy volume after the company announced its second-quarter earnings on softer sales and also cut its 2016 outlook. 

Agrium Inc. (up 7%) and Potash Corp. of Saskatchewan Inc. (up 10.8%) confirmed they are in preliminary talks about a potential $28bn-plus merger of equals.

Asia Pacific Stocks

Hong Kong highlights

  • China Singyes (750 HK): Profit rises as China demand boosts solar business 
  • CSCL (2866 HK): First-half net loss 840.8m yuan vs restated profit 834m yuan a year ago 
  • Fosun Intl (656 HK): First-half profit increases 21% 

  Japan highlights 

  • Canon (7751 JP): To sell image sensors to other manufacturers: Nikkei 
  • Mitsui & Co. (8031 JP): Co, JBIC to buy $332m of RusHydro stock: Nikkei 
  • Nikon (7731 JP): To get boost from OLED panel equipment orders: Nikkei 


Southeast Asia highlights 

  • Globe Telecom (GLO PM), PLDT (TEL PM), San Miguel (SMC PM): Court halts antitrust body’s review of deal 
  • PTT Exploration (PTTEP TB): Signs deal with Petronas to develop marginal fields 
  • Jiutian Chemical (JIUC SP): Expects to start commercial production of project sodium hydrosulfite in first-half 2017. 

Source: Bloomberg 

 USDJPY rallied nearly 140 points steadily throughout the day to close above its 50-day moving average. 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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