Markets quiet on US holiday

Today’s Asian morning session was a quiet, timid affair, with investors unwilling to participate given the US President’s day holiday today. Markets were generally adopting a mild risk-on approach, with equity indices firmer and risk-beta currencies better bid.

US indices rose between 0.16% and 0.40%, with the NAS100 index gaining the most, while the only Asian bourse in the red was the Japan225 index as USD/JPY pushed higher. The Aussie and the Euro advanced, while the pound stood still.

AUD/USD looks set to advance for the first time in three days today amid the better risk sentiment. The 0.6670 level could be labeled a near-term base, at the moment, since the FX pair has rebounded twice off that level, once in October last year and another time earlier this month.

AUD/USD Daily Chart

Source: OANDA fxTrade

CoVid-19 update

The total number of cases globally has risen to 71,331 as at 11.30am Singapore time, with deaths reaching 1,775, five of which were registered outside Chinese borders. The US has flown more than 300 citizens from Japan who had been quarantined on the cruise ship off Japan and they are due to face further quarantine for 14 days on US shores.

Singapore has scaled back its 2020 GDP growth forecasts as a result of the impact of the CoVid-19 virus, particularly on the tourism sector, and has pledged fiscal help for those affected by the outbreak in the upcoming budget. Both China and Hong Kong have also pledged extra fiscal support to counter the downturn effect of the virus.

Singapore growth revised up

The Singapore economy enjoyed a positive end to last year with economic growth revised higher from prior estimates. On a quarter-by-quarter basis, the final reading showed GDP grew 0.6% in Q4, more than the 0.1% at the previous estimate. On an annualized basis, growth was 1.0%, the best in three quarters.

The breakdown saw a contraction in the manufacturing sector but gains in both services and the finance and insurance industries. Looking ahead, the government cuts its 2020 growth forecast to -0.5% to +1.5% from 1.5% to 1.9% previously, stating that it expects most of the CoVid-19 negative impact to be felt in the first half of the year.

The Singapore dollar was firmer on the day, climbing form the weakest point versus the US dollar in more than five months last Friday. USD/SGD is down 0.16% at 1.3900 today.

USD/SGD Daily Chart

Source: OANDA fxTrade

China cuts medium term rates

In addition to the Chinese government’s promise of fiscal measures to counter the impact of the CoVid-19 virus, the Peoples Bank of China today trimmed 10 bps off its one-year medium-term lending facility (MLF), dropping the rate to 3.15% from 3.25%, which was the first cut since November 5 last year. Speculation is now circulating that the PBOC will cuts its loan prime rate (LPR) later this week, probably on February 20.

USD/CNH fell after the announcement, declining for the first time in four days and holding below the 200-day moving average at 6.9959. The 100-day moving average sits above at 7.0119, and that moving average has capped prices since December 4.

USD/CNH Daily Chart

Source: OANDA fxTrade

All quiet on the data front

Today’s US President’s Day holiday notwithstanding, the rest of the world has little to report on the data front. Euro-zone construction output for December and a speech from ECB’s Lane occupy the European calendar, while the North American session features Canada’s securities portfolio flows for December.

The full MarketPulse data calendar can be viewed at https://www.marketpulse.com/economic-events/

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