Gold gains most in more than two years

Gold is back in favor

The safe haven of gold, very much unloved over the past few months as it stood in the dollar’s shadow, saw its fortunes reverse yesterday to record the biggest one-day gain in almost 2-1/2 years. A weaker US dollar amid easing US yields and a below-forecast CPI print, reduced demand for the greenback, leaving gold to take up the slack, for a change.

Gold jumped more than 2.5%, its biggest one-day gain since June 2016, to reach the highest level since July 31. The commodity is now testing the 100-day moving average at 1,228.99, which has capped prices since April 30.

 

Gold Daily Chart

Source: Oanda fxTrade

 

China’s trade surplus with US hits record high

The September trade numbers will likely not be music to Mr Trump’s ears. Exports rose 14.5% y/y, beating economists’ estimates of a mere 8.9% increase. That’s the biggest monthly gain since February. The overall trade surplus widened to $31.7 billion, the highest in three months.

China Customs also reported that exports to the US were up 16.6% y/y while imports from the US rose just 1.6% y/y, pushing the trade surplus with the US to a record high $34.1 billion. The agency commented that the impact from the US trade frictions was “controllable” and that Chinese exporters were diversifying their markets.

The reaction in FX markets was marginal. AUD/USD slid to 0.7118 from 0.7124 while USD/CNH rebound from intra-day lows to 6.9026. AUD/USD currently appears to be struggling to overcome previous highs in the 0.7130-31 window.

 

AUD/USD Hourly Chart

Source: Oanda fxTrade

 

Singapore tightens policy marginally as Q3 growth beats estimate

In its semi-annual policy review, Singapore’s de-facto central bank tightened policy by a minimal amount. Rather than fix a benchmark interest rates, Singapore manages monetary policy by guiding the value of the local dollar against a basket of currencies of its major trading partners. The MAS raised “slightly” the slope of appreciation of the net effective exchange rate (NEER) trading band of the Singapore dollar, keeping the width and center of the band unchanged. This was tantamount to a mild tightening of monetary conditions as latest surveys had suggested it was a 50/50 chance.

Looking ahead, the MAS sees 2018 growth in the upper half of a 2.5% to 3.5% range then moderating “slightly” in 2019. Core inflation is seen in a 1.5% to 2.0% range and averaging 1.5% to 2.5% in 2019.

The Singapore dollar rose marginally after the announcement, with USD/SGD poised to record its second consecutive daily loss. USD/SGD is now at 1.3739 with the 100-day moving average below at 1.3637.

 

USD/SGD Daily Chart

Source: Oanda fxTrade

 

One of the first nations to report Q3 GDP numbers, Singapore’s economy grew 2.6% y/y, faster than the than the 2.5% growth anticipated by economists, but slower than the 3.9% pace in Q2. On a quarterly basis, growth was below expectations of a 4.9% increase, but faster than the 0.6% posted in Q2.

China will release its Q3 GDP data next Friday and is also expected to show slower annualized growth from Q2. The latest survey suggests 1.6% q/q and 6.6% y/y from 1.8% and 6.7% respectively.

 

 

Will German CPI echo the US miss?

After yesterday’s release of below-forecast CPI data from the US, today it’s the turn of Germany. Estimates for September suggest consumer prices rose at the same pace as August, up 0.4% m/m and 2.3% y/y. August industrial production data for the Euro-zone follow the CPI numbers and then the calendar thins out with only second-tier US data scheduled. Export and import prices and Michigan sentiment index are the highlights, with speeches from Fed’s Evans and Bostic completing the week.

You can view the full MarketPulse data calendar at https://www.marketpulse.com/economic-events/

 

Have a great weekend from Asia.

Dollar Lower on Weak Inflation OANDA Market Beat Podcast

Source: MarketPulse

Euro jumps as Italy revises budget plans

Euro jumps on Italy budget headline

Italy is trying hard to convince the rest of Europe that its move to increase the deficit-to-GDP ratio to 2.4% in 2019 is only a temporary move. Today, the Italian press reported that the government aims to get it back down to 2% by 2021. This is contrary to earlier reports that the Italian government had agreed a 2.4% ratio for the full 2019-2021 period. Italy’s debt-to-GDP ratio is currently estimated at a whopping 131% and the government sees is being trimmed to 127% by 2021.

EUR/USD had a 30 pip move higher to 1.1595 on the news, though stopped short of the 55-day moving average at 1.1614. The 100-hour moving average currently sits at 1.1612 as well. The pair is now at 1.1585. The news also helped the broader risk appetite with USD/JPY up 0.04% to 113.73 and the US dollar weakening 0.22% against a basket of six major currencies.

 

EUR/USD Hourly Chart

Source: Oanda fxTrade

 

Aussie falls as building permits slump

AUD/USD fell further from the 0.72 handle in Asian trading in a knee-jerk reaction to news that building permits slumped a hefty 13.6% year-on-year in July, much worse than economists’ estimates of a 2.5% decline. July’s drop was the worst in 12 months and comes despite the RBA holding rates at record lows. Even the big Australian banks didn’t start to increase rates on flexible rate mortgages due to higher funding costs until late-August, so there’s a chance that next month’s numbers could be equally disappointing.

AUD/USD fell as much as 0.34% to 0.71654 though failed to break below yesterday’s two-week low of 0.71632 and has since rebounded to 0.7182 on the shift in risk appetite

 

AUD/USD Daily Chart

Source: Oanda fxTrade

 

Trend of softer PMIs continues

The global tale of weaker PMIs was extended to Singapore today, as the Nikkei full economy PMI fell to 49.6 in September, the first dip below the contraction/expansion threshold in about 2-1/2 years. Declines were noted in both the output index and the new orders index, which is perhaps more of a concern going forward. USD/SGD showed little reaction, following more the broader trend of a weaker US dollar on the day as the pair rose 0.02% to 1.3734.

 

US markets rescue global risk sentiment yet again

 

PM May to speak at party conference

Perhaps the biggest event to grad the headlines today will be PM Theresa May’s speech at the Conservative party conference later today. Yesterday, Boris Johnson received cheers after he attacked her Brexit policies, so let’s see how she responds. Watch out for those Brexit headlines.

Other data releases include Market services PMIs for both Germany and the Eurozone along with EU retail sales for August. In the US we get to see the ADP employment report, the customary forerunner to Friday’s nonfarm payrolls, and the ISM non-manufacturing PMI. There’s a host of Fed speakers with Barkin, Brainard, Mester and Powell all on tap.

 

You can view the full MarketPulse data calendar at https://www.marketpulse.com/economic-events/

 

OANDA Trading podcast: Asia Market Update @938 Now(3 Oct 2018)

Source: MarketPulse