20171117-大华银行-Markets_Overview_4页_249kb

Global Economics & Markets Research Summary (17 November 2017)

Markets Overview

The USD had a mixed performance, stabilizing against major currencies like EUR and JPY but facing pressure against Asian currencies with strong current account surpluses. Key psychological levels were lost, particularly USD/KRW and USD/THB, which fell below 1,100 and 33.00, respectively. This led to a decline in USD/SGD to 1.3566/USD. The DXY Index consolidated just under 94.00.

Central Bank Outlook

• Bank of England: Governor Mark Carney suggested that the BoE could raise rates "a couple of times" over the next few years if the UK economy performs as projected. However, the uncertainty surrounding Brexit negotiations continues to weigh on the GBP.
• Bank Indonesia: Maintained its key policy rate at 4.25% and revised its 2017 growth forecast to 5.1%, near the lower end of its previous range. The central bank remains confident in its current policy settings.

FX Market

• The USD was relatively stable against the majors, with EUR/USD capped below 1.18 and USD/JPY just above 113.00.
• Asian currencies showed mixed performance: KRW gained 1.0%, PHP gained 0.4%, and THB rose 0.2%. SGD fell 0.1% to 1.3565/USD.
• UOB's forecast for SGD NEER suggests a range of 1.3517 to 1.3584, based on current FX levels.

Equities

Global equities rebounded strongly, with the Nasdaq rising 1.3%, DJIA and S&P 500 each up 0.8%. This was driven by positive news on US tax reform and strong earnings from key stocks. The VIX dropped from 13% to 11.5%.

In Asia:

• North Asia: Nikkei 225 rose 1.47% due to gains in consumer staples, healthcare, and telco sectors.
• Southeast Asia: Mixed performance with JCI up 1.1%, SET flat, and STI, KLCI, and PSEi down.

Futures indicate continued strength in Asian and U.S. equities, with Japan, China, and Hong Kong indices showing positive momentum.

US Treasuries

• Front-end US rates rose, with 3M Libor at 1.42% and 2Y Treasuries yield at 1.71%.
• The 2s10s yield spread remained depressed at 66 bps.
• Gold prices remained flat at USD 1,280/oz due to the ongoing rise in front-end yields.

Commodities

• Crude oil prices faced pressure due to Norway's sovereign fund announcement to divest from oil and gas, leading to a near 1% sell-off. Brent Crude and WTI Crude dropped to USD 61 and USD 55 per barrel respectively.
• The fund's move was part of a broader strategy to diversify wealth away from energy prices.

Economic News & Data

• US Tax Reform: The US House passed a draft of tax reform, which could lead to a rise in interest rates. The debate is expected to intensify in the Senate, which has a different plan.
• US Industrial Output: Grew by +0.9% MoM in October, recovering from hurricane disruptions.
• Philippines GDP: Surpassed expectations with 6.9% y/y growth in 3Q, driven by strong exports and industrial output.
• Hong Kong Unemployment Rate: Improved to 3.0% in October.
• Malaysia GDP: Expected to grow at 5.7% y/y in 3Q, slightly lower than the 5.8% growth in the previous quarter.
• Thailand Foreign Reserves: Will be reported on 15 November.
• Singapore NODX: Expected to show a 11.9% y/y expansion in October, compared to a 1.1% contraction in September.

Foreign Exchange Rates (as of 16 November 2017)

Stock Indices (as of 16 November 2017)

UOB's Estimation of SGD NEER (as of 17 November 2017)

Interest Rates

Bond Yields (as of 16 November 2017)

Market Holidays/Events