Markets Overview

HIGHLIGHTS AHEAD

    For today, the economic data for the developed economiesinclude Japan’s machine orders and PPI (7:50am),Australia’s employment numbers (8:30am), Germany’s GDP(5:00pm), U.S import prices index and initial jobless claims(9:30pm) and Canada’s new housing price index (9:30pm).

    The main events in Asian session today (14 Jan)will be Bank of Korea’s policy meeting (no fixed time forannouncement, but was 850am to 950am SGT in pastmonths), which is expected to leave policy rate unchangedat 1.5%, with possibility of dissenting votes. Later in theafternoon, Bank Indonesia is due to announce its policy ratedecision (no fixed time, but range from 414pm to 646pm SGTin past 6 months), and there is a possibility of easing thecurrent 7.5% benchmark rate, given the six-year low inflationrate in Dec amid sub-par economic growth. Analysts are splitdown the middle as to BI’s decision today. Data wise, China’sDec loans and money supply data remain outstanding thisweek, ahead of the 4Q GDP report due next Tue (19 Jan).

    CENTRAL BANK OUTLOOKThe BOE meets today and is expected to keep rates andQE target unchanged and ECB will release minutes for its3-Dec meeting.

    Central bankers speaking today include BOE’s AndrewBailey and Fed’s Bullard (voter).

    FXIn G10, the U.S. dollar ended mix against its peers. EUR/USD benefited from the pick-up in risk aversion, higher by0.17% to 1.0877 but still chop between 1.08 and 1.09. GBP/USD declined further to 1.4407 but saw keen buying interestbelow 1.44 for the second straight day. A status quo BOEtoday may reverse a short-term technically oversold cable.

    USD/JPY reversed earlier gains of as high as 118.38 in Asiawhen equities losses bite in in the NY session to close flatat 117.68. AUD (-0.44%) and NZD (-0.37%) continued tobe laggards in G10 in the current risk-off environment whileCAD fell to fresh 12-yr low vs USD, at 1.4340.

    Asian currencies were broadly higher on Wed, helpedby stability in the CNY/CNH markets as well as better thanexpected China’s trade report early in the morning. With theaggressive measures taken to dampen CNH depreciationexpectations and in the run up to the Chinese New Year early next month, investors are likely to shift focus to datareleases and geopolitical developments for leads.

    In Asian session on Wed, IDR led with a 0.6% gain, the mostsince 22 Dec, to 13,833/USD despite possibility of an interestrate cut today at Bank Indonesia’s policy meeting. Ahead ofBoK’s meeting on Thur, KRW advanced 0.5% after 2 days oflosses, the most since 16 Dec, to 1,203.93/USD after hittinghigh of 1,203.01 intraday. MYR rose 0.3% to 4.3958/USD,and was hit high of 4.3817 intraday and THB gained 0.1% to36.281/USD. TWD edged up 0.1% to 33.625/USD, snappingtwo days of losses though PHP fell 0.2% to 47.545/USD tolowest level since Nov 2009, extending its declines for the6th consecutive session.

    USD/SGD jumped overnight as large losses in theUS stock markets rekindled risk aversion, to 1.4368 lateWed, from low of around 1.4309 just US equity marketsaccelerated its losses. The weaker SGD also saw pressureson the short term interest rate front, as 3-month SIBOR onWed crossed the 1.25% mark and fixed at 1.252%, last seenseven years ago, up from 1.249% on Tue and 1.185% atend-2015, which rose nearly 73bp from end-2014.

    This morning, the SGD NEER index slumped to low of -1.55% below the midpoint, from around -1.37% yesterday,as the SGD bore the brunt of the risk off trade. It is likely forthe index to recover in the morning as other Asian currenciesreact. The 1.0% and 1.5% below the midpoint implies USD/SGD range of 1.4300