Article / 10 July 2015 at 0:59 GMT

Singapore Morning Report: Risk on as global trauma eases

Sales Trader / Saxo Bank
Denmark
  • The USDJPY is gaining ground after the China stock rally and Greek relief hopes
  • Japan's central bank is considering cutting growth estimates for fiscal 2015
  • The USDMYR dropped, with constant selling onshore and overall USD selling


By the APAC Sales Trading Team, Saxo Capital Markets (Singapore)


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China is in the spotlight following the rally in Chinese equities, which will have an impact on commodities and markets across the region. Photo: iStock

Economic data of the day (Singapore Time)

  • 0750 JPY – PPI MoM June (Prev. 0.3%)
  • 0750 JPY – PPI YoY June (Prev. -2.1%)
  • 1200: MYR – Industrial Production YoY (Prev. 4.0%)
  • 2030: CAD – Unemployment Rate (Prev. 6.8%)
  • 2030: CAD – Net Change in Employment (Prev. 58.9k)
 
Speeches
  • 1300: Fed’s Esther George speaking on the economy in Oklahoma

Overnight News


  • Greece wants a three-year bailout loan of at least €53.5 billion in exchange for reforms and spending cuts package (includes pension savings, tax increases)
  • The package will be presented to the Greek parliament on Friday
  • Largest US ETFs tracking China shares surged 20% overnight
  • US Initial Jobless Claims were higher than expected at 297,000 (275,000 was expected, highest since February) and Continuing Claims came at 2,334,000 (Exp. 2,250,000)
  • Bank Negara Malaysia kept the rates unchanged at 3.25%. The statement said: "While recent global and domestic developments have affected the ringgit exchange rate and domestic financial markets, there remains ample liquidity in the domestic financial system with continued orderly functioning of the financial and foreign exchange markets."
  • Bank of Japan is considering cutting estimates for fiscal 2015 real growth in gross domestic product to the upper 1% level in light of China's economic slowdown and weaker-than-expected exports and production
  • Kansas City Fed president Esther George said the Fed is waiting for more data. She said acting prematurely could be a trap and the Fed would prefer rates modestly higher


Foreign exchange

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 Source: Bloomberg (range 5pm -5.30am Singapore Time)


 
The USDJPY is gaining back the loss after the big rally in Chinese stocks yesterday and the possible bailout of Greece this weekend. We are trading 1.1% higher from the lows of yesterday. EURUSD continues to settle down at the lows of the range. There is also a small relief in AUD with metals up overnight but the trend lower is still maintained
 
Updates on Asian currencies and EM

The USDMYR dropped again below the ex peg level of 3.8000 with a constant selling onshore from locals and overall USD selling overnight. The rest of EM currencies were overall quiet.

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One week at the money volatility remained well supported overnight as the market wants to be long gamma going into this weekend and Greek bailout negotiations. Risk reversal in AUD. Still trade at the lows with a strong favour for AUD puts which should remain supported

Rates

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The risk on move overnight completely washed the move lower in rates the past few days and US treasuries rallied 8 basis points overnight to go back to the middle of the range


Commodities

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Equities

Overnight, US markets enjoyed a strong open as investors had more willingness to take on risk globally. Indices peaked early on the session with the Dow up more than 200 points, but traders took profits throughout the day. The NASDAQ led the retreat with large cap names like Apple and Intel weighing things down.

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European stocks rose shrugging off concern about Greece’s debt crisis and Chinese shares rebounded; with mining stocks in the UK spurring gains in mining shares. 

– Edited by Robert Ryan

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Singapore Morning Report is compiled by the APAC Sales Trading Team, Saxo Capital Markets, Singapore. Follow us on @SaxoStrats on Twitter or on our website.
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