Morning Report APAC: Watch for Australian dollar volatility today
- Gold briefly pushed above $1300/oz on monetary policy speculation
- There was no base metals trading with the LME closed for May Day
- Expect volatility in the Australian dollar today, with the RBA to decide on rates
- BoJ's Haruhiko Kuroda says the high yen will have unwelcome effects on GDP
- Crude was weaker after Iraq announced it had shipped 3.36mln barrels/day in April
By Saxo APAC Sales Trading
Economic data of the day (Singapore Time: GMT plus 8 hours)
0700: KRW – CPI MoM (Actual. 0.1%, Est. 0.1%) YoY (Actual 1%, Est. 1%)
093m: AUD – Building Approvals MoM (est. -2%, Prev. 3.1%) YoY (Est. -14%, Prev. 9%)
0945: CNY – Caixin China PMI Mfg (Est. 49.8, Prev. 49.7)
1130: MYR – Nikkei Malaysia PMI (Prev. 48.4)
1230: AUD – RBA Cash Rate Target (Est. 2, Prev. 2%)
1700: EUR – PPI MoM (Est. 0%, Prev. -0.7%) YoY (Est. -4.3%, Prev. -4.2%)
1700: EUR – European Commission Economic Forecasts
2100: SGD – Purchasing Managers Index (Est. 49.5, Prev. 49.4)
1515: EUR – European Central Bank board member Benoit Coeure speaks in Paris
1515: EUR – ECB board member Yves Mersch speaks at Asian Development Bank annual meeting in Frankfurt
- US: ISM Manufacturing came in below expectations in April at 50.8; down from 51.8, but remains the second highest result in the past eight months. New orders were at 55.8, from 58.3, and production was at 54.2, from 55.3 in March. There was a continued drawdown in inventories, with the index at 45.5, from 47.0. The ISM prices paid index spiked to the highest level since September 2014 at 59.0 (market expectation: 52.0) from 51.5. The spike is partly due to the recent rebound in commodity prices and price pressures from the lower US dollar. The final Markit manufacturing PMI was at 50.8, in line with the market and matching the initial estimate.
- US construction spending expanded 0.3% m/m in March (the market expected 0.5%) and there were backward revisions to January and February. Private sector spending (+1.1%), led by a 1.5% gain in residential construction, was able to offset a 1.9% fall in public spending in March. The firmer spending data will provide a modest upward revision to Q1 GDP data.
- Eurozone: The euro area manufacturing PMI edged up 0.1 point to 51.7 in April. A rise in Germany, Italy, and Spain offset the weaker reading for France.
- ECB President Mario Draghi said that the central bank’s policy is helping the Eurozone economy get back on its feet. “Today, faced with a persistent output gap and too-low inflation, our monetary policy is stimulating the economy by steering market rates below their long-term levels,” he said. “There is little doubt that question marks over the future of the euro area, and the European Union in general, are contributing to uncertainty for individuals and firms, and that this can hold back consumption and investment,” he said. “Removing this uncertainty will help boost consumption and unleash investment across the continent.”
- Markets in Japan are closed from today, and back again on Friday, while China, Hong Kong, Singapore, Taiwan, Malaysia and Thailand have returned from a long weekend.
Forex markets weren’t particularly busy on Monday, taking their cue from overseas where many markets were closed for May day holiday. Of note though, was the US dollar, which remained on the back foot as the ISM declined to match the Markit PMI. The euro moved higher, supported by higher-than-expected Eurozone PMI data and the weaker than expected US data.
Meanwhile, Bank of Japan governor Haruhiko Kuroda was out saying the strong yen would have unwelcome effects on the economy and be closely watched for market impact. However his talk had little impact on forex markets, and the USDJPY remained at around 106.40.
Traders bought the AUD ahead of the Reserve Bank of Australia interest rate announcement due today, despite the 50/50 risk of a rate cut. Expect plenty of volatility in the Australian dollar today.
With markets closed for holidays in most markets, price action was thin. US yields rose marginally on ISM data with US 10 year yields up (+3.9bps).
It was a quiet session overnight with London closed for the May Day holiday. Global equities were mixed on thin volumes.
In Europe, Italian bank Intesa Sanpaolo slid 2% after it announced the sale of its Setefi and Intesa Sanpaolo card-payments units for €1.04bln in cash to a consortium of PE funds.
In the US, the minor gains came off the biggest weekly retreat since February and were led by bank stocks and a continued climb by Amazon. Halliburton Co. (+1.8%) and Baker Hughes Inc. walked away from their planned merger, one that had been valued at as much as $35bln, due to regulatory opposition on several continents.
In Asia, with one of the biggest markets Japan, closed, while other markets are playing catch up from being closed yesterday, expect some divergence across the regions.
Stocks to watch in Asia today
- China Construction Bank (939 HK): Q1 net 68bn yuan vs 67bn yuan y/y.
- PICC Property & Casualty (2328 HK): AIG raises $1.25bn selling PICC stock near the bottom of range.
- Centurion (CENT SP): To buy four UK student accommodation assets for £20.1mln.
- OCBC (OCBC SP): Cut to hold at CIMB.
– 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
Join our Global Market Call daily at 1540 Singapore Time. Follow us on @SaxoStrats on Twitter or in our website: https://www.tradingfloor.com/
Please Contact us for any Market Updates. Global Sales Trading: +65 6303 7818;
- Christopher Moltke-Leth - firstname.lastname@example.org
- Lakshmi Thurai - email@example.com
- Tareck Horchani - firstname.lastname@example.org
- Edmund Liu - email@example.com
Global Macro Strategist: +65 6303 7622
- Kay Van-Petersen - firstname.lastname@example.org
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 saxomarkets.com.sg. 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.
Samsung Hub | 3 Church Street | # 30-01 | Singapore 049483
Company No. 200601141M