Today's edition of the Saxo Morning Call features the SaxoStrats team discussing the continuing weakness of the US dollar as commodity prices recover ground and in the wake of key US equity indices hitting all-time highs Thursday.
Article / 28 July 2016 at 2:16 GMT

Morning Report APAC: USD falls across the board, oil slides

APAC Sales Trading Desk / Saxo Capital Markets


  • USD losses continue after Fed reiterates its gradual approach to rates
  • Japan shares back to losses as the JPY starts to reassert itself
  • US crude trades near a three-month low after increase in US stockpiles


By Saxo APAC Sales Trading




2200: EUR - Bank of Portugal governor Carlos Costa speaks in parliament on Caixa Geral

Overnight news

The Federal Open Market Committee statement was a modest hawkish upgrade and a hike in September can no longer be ruled out if the labor market continues to perform.

The committee remains concerned about inflation, and the risk of external shocks. However, these concerns are no more pressing than they were at the time of the December meeting, at which point the FOMC increased its policy rate and signaled four additional hikes in 2016.

In the UK the preliminary estimate of Q2 16 GDP printed at 0.6% quarter on quarter marginally ahead of the consensus expectations and the Bank of England staff (who were at 0.5% q/q each), accelerating from 0.4% q/q in Q1 16.

While today’s print was above consensus we still expect downside risks to growth for Q3 16 onwards in light of the significant deterioration seen in post-referendum surveys.


The JPY weakened sharply following media reports (eg The Wall Street Journal) that fiscal stimulus would be JPY 28 trillion, and that the Ministry of Finance is considering the issuance of 50y JGBs.

However, the currency recovered some of the losses as the JGB issuance report was later denied by the MoF

The USD got a lift following the FOMC with EURUSD reaching a low of 1.0960 area, only for USD to lose all the gains and see EURUSD sharply rally higher close to the 200 day moving average, which is at 1.1074 area.

Generally the USD lost across the board, but remains contained in within the ranges

Foreign exchange movements



Treasury yields went lower as the Federal Reserve said it expects to raise interest rates gradually and gave little hint that an increase is coming soon.

Yields were lower on the day as officials kept the range for the federal funds rate at 0.25-to 0.5% following a two-day meeting.

US 10 year bills shed 6 basis points, the most in three weeks to 1.50 and the spread between US and UK 10-year securities climbed to 0.78 percentage point, the most based on end-of-day levels since 2000.



Most US stocks fell with earnings and as investors assessed the Federal Reserve’s latest policy decision for the timing of interest-rate increases.

The S&P 500 Index fell 0.1% to 2,166.58. Energy shares tumbled 1% as crude sank 2%. The Dow Jones Industrial Average finished little changed, while the technology-heavy Nasdaq 100 Index rose 0.7%.

Apple jumped 6.6%, the most since April 2014, after posting a smaller-than-expected revenue decline as its cheaper iPhone model gained more traction. Twitter sank 14.5%, the most in three months, after its third-quarter sales fell well short of predictions.

Earnings announcements helped push the Stoxx Europe 600 Index up as much as 0.8% before it pared its gain to 0.4% amid a slide in oil.

The moves took benchmark gauges of French, Italian and Spanish equities up more than 1%, the biggest increases among western European markets.

UK shares climbed after a report showed that the economy in the second quarter grew faster than projected.

LVMH jumped 7.5% after the world’s biggest luxury-goods maker reported stronger demand for its champagnes and cognacs. Telecom Italia surged 7.8% after posting the steepest increase in domestic quarterly earnings in seven years.

GlaxoSmithKline Plc added 1.8% after earnings topped estimates.

Asia-Pacific stocks

-      Acom (8572 JP) 1Q 2:30pm
-      AIA Group (1299 HK) 1H $1.6b (3 analysts) 6am. Preview
-      Ajinomoto (2802 JP) 1Q 1pm
-      Amano Corp (6436 JP) 1Q 2pm
-      ASM Pacific Technology (522 HK) 2Q HK$303.6m (5 analysts)
-      Atom Corp (7412 JP) 1Q 2pm
-      Benefit One (2412 JP) 1Q 3pm
-      Cheung Kong Infrastructure (1038 HK) 1H
-      Chugoku Electric Power (9504 JP) 1Q 2:30pm
-      Dairy Farm International (DFI SP) 1H
-      Daito Trust Construction (1878 JP) 1Q 10:30am
-      Exedy Corp (7278 JP) 1Q 3pm
-      Fuji Electric (6504 JP) 1Q 1.6b yen (4 analysts) 2:30pm
-      Fujikura (5803 JP) 1Q 2pm
-      Fujitsu (6702 JP) 1Q 17.8b yen loss(4 analysts) 2pm
-      Hang Lung Group (10 HK) 1H
-      Hang Lung Properties (101 HK) 1H
-      Hankyu Hanshin (9042 JP) 1Q 2:30pm
-      Hino Motors (7205 JP) 1Q 2pm
-      Hitachi Capital (8586 JP) 1Q 12pm
-      Hitachi Metals (5486 JP) 1Q 3:30pm
-      Hitachi Transport System (9086 JP) 1Q 2pm
-      Hokuriku Electric (9505 JP) 1Q 2pm
-      Hongkong Land (HKL SP) 1H
-      House Foods Group (2810 JP) 1Q 2pm
-      Hulic (3003 JP) 1H 10am
-      Itochu Enex (8133 JP) 1Q 12pm
-      Japan Exchange Group (8697 JP) 1Q 11am
-      Kandenko (1942 JP) 1Q 4pm
-      Kao Corp (4452 JP) 1H 2pm
-      Kobayashi Pharmaceutical (4967 JP) 1Q 2pm
-      Koito Manufacturing (7276 JP) 1Q 3pm
-      Komatsu (6301 JP) 1Q 2pm
-      Konica Minolta (4902 JP) 1Q 9.1b yen (4 analysts) 2pm
-      Kyocera (6971 JP) 1Q 19.5b yen (4 analysts) 2pm
-      Makita Corp (6586 JP) 1Q 2pm
-      Mandarin Oriental (MAND SP) 1H
-      Meitec Corp (9744 JP) 1Q 10am
-      Mitsubishi Electric (6503 JP) 1Q 53.8b yen (4 analysts) 12:15pm
-      Monotaro (3064 JP) 1H 2pm
-      Murata Manufacturing (6981 JP) 1Q 48.3b yen (6 analysts) 2pm
-      NGK Insulators (5333 JP) 1Q 2:40pm
-      Nippon Gas (8174 JP) 1Q 1pm
-      Nippon Steel & Sumitomo Metal (5401 JP) 1Q 2pm
-      Nippon Television Holdings (9404 JP) 1Q 12.0b yen (4 analysts) 2pm
-      Nomura (8604 JP) 1Q 2pm
-      Nomura Real Estate (3231 JP) 1Q 2pm
-      Nomura Research Institute (4307 JP) 1Q 14b yen (3 analysts) 2pm
-      NS Solutions Corp (2327 JP) 1Q 4.3b yen (4 analysts) 10am
-      OCBC (OCBC SP) 2Q S$895m (3 analysts) bef-mkt. Preview
-      Omron (6645 JP) 1Q 12.1b yen (5 analysts) 2:20pm
-      Orient Corp (8585 JP) 1Q 2pm
-      Oriental Land (4661 JP) 1Q 25.0b yen (3 analysts) 3pm
-      Osaka Gas (9532 JP) 1Q 2pm
-      Power Assets (6 HK) 1H
-      SBI Holdings (8473 JP) 1Q
-      SCSK Corp (9719 JP) 1Q 5.6b yen (4 analysts) 2pm
-      Seiko Epson (6724 JP) 1Q 2pm
-      Sekisui Chemical (4204 JP) 1Q 12:30pm
-      Sembcorp Marine (SMM SP) 2Q aft-mkt
-      Shikoku Electric Power (9507 JP) 1Q 12:30pm
-      Shinkin Central Bank (8421 JP) 1Q 3pm
-      Shizuoka Bank (8355 JP) 1Q 3pm
-      Singapore Airlines (SIA SP) 1Q aft-mkt
-      SK Telecom (017670 KS) 2Q 282.4b won (11 analysts) 8am
-      SMRT (MRT SP) 1Q
-      SoftBank Group Corp (9984 JP) 1Q 2pm
-      Sumitomo Mitsui Trust (8309 JP) 1Q 3pm
-      TIS Inc (3626 JP) 1Q 2.5b yen (3 analysts) 2pm
-      Tobu Railway (9001 JP) 1Q 1pm
-      Tohoku Electric Power (9506 JP) 1Q 2pm
-      Tokai Rika (6995 JP) 1Q 1pm
-      Tokyo Electric Power (9501 JP) 1Q 3:45pm
-      United Overseas Bank (UOB SP) 2Q S$793.7m (3 analysts) bef- mkt. Preview
-      Yahoo Japan Corp (4689 JP) 1Q 49.0b yen (6 analysts) 2pm

Stocks to Watch

China Highlights
-      Nanjing Panda (600775 CH): Main shareholder seeks to postpone stake increase
-      Wanda Cinema Line (002739 CH): To buy Mtime.Com for $280m
-      Vanke (2202 HK): Chairman visits China Resources office: 21st Herald

Japan Highlights
-      Advantest (6857 JP): Raises full-year oper. profit forecast 10% to 11b yen
-      Alpine Electronics (6816 JP): Lowers full-year oper. profit forecast 13% to 3.9b yen
-      Fanuc (6954 JP): Boosts full-year oper. profit forecast 14% to 134.1b yen
-      Hitachi Construction (6305 JP): Cuts full-year oper. profit forecast 22% to 28b yen
-      Nintendo (7974 JP): 1Q oper. loss 5.13b yen vs est. 2.12b yen loss (4 analysts); delays Pokemon Go Plus product
-      Nissan Motor (7201 JP): 1Q oper. profit 175.8b yen vs analyst est. 166.1b yen
Southeast Asia Highlights
-      Singapore Exchange (SGX SP): 4Q net falls 20% to S$76.8m
-      Neo Group (NGL SP): Expects 1Q net loss
-      Syarikat Takaful (STMB MK): 2Q net income rises 17% to 45.5 million ringgit

Information sources: Bloomberg


 Janet Yellen and the Fed seem to be inching their way back to the rate hike table. Photo: Flickr

– Edited by Adam Courtenay

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