20180723-大华银行-Markets_Overview_6页_222kb

Global Economics & Markets Research Summary

Core Content Overview

This document provides a detailed analysis of global financial markets and economic indicators as of 23 July 2018, highlighting the impact of political and economic developments on currency, equities, and commodities.

Main Highlights

Market Volatility

• President Trump's tweets on tariffs and criticism of the USD and Federal Reserve contributed to market volatility.
• The USD weakened significantly after Trump accused the Eurozone and China of currency manipulation, and the RMB fell to a two-year low, raising concerns about intentional devaluation.
• EUR/USD rose to 1.1735, while USD/JPY fell to 111.20. GBP/USD stabilized around 1.3140, and AUD/USD supported near 0.74.

Key Economic Data

• Singapore's June CPI is expected to rise by 0.6% y/y, up from 0.4% y/y in May. Core inflation is expected to remain at 1.5% y/y.
• Thailand's June exports grew by 8.2% y/y, slightly below market forecast of 9.5% y/y, but still showing growth. Imports increased by 10.8% y/y.
• Taiwan's June industrial production is forecasted to rise by 4.75% y/y, down from 7.05% y/y in May. The unemployment rate is expected to be 3.71% y/y, up slightly from 3.69% y/y.
• Hong Kong's June composite CPI is expected to rise by 2.2% y/y, up from 2.1% y/y in May.

Upcoming Data Releases

• US 2Q GDP is expected to jump to 4.0% from 2.0% in Q1, with US corporate earnings set to be a key focus for the week.
• South Korea's 2Q GDP is expected to rise by 2.9% y/y, while Singapore's 2Q unemployment rate and URA private home prices will be released on 27 July.
• China's June industrial profits and July consumer confidence will be released on 27 July.

Central Bank Outlook

• The Fed enters its blackout period ahead of the 31 July / 1 August FOMC meeting, limiting its influence on markets during this time.
• The ECB is the only G7 central bank with a monetary policy decision this week, but it is expected to be a non-event since it had already announced the end of its bond-buying program.

FX Market Insights

• USD fell sharply from above 95 to 94.30 due to trade tensions and criticism of the Fed.
• SGD was the strongest Asian currency, rising 0.7% to 1.3631/USD.
• THB rose 0.4% to 33.33/USD, while TWD fell 0.3%.
• PBoC is expected to set the RMB midpoint at 6.7649/USD, a 22 pip increase from the previous fixing of 6.7671/USD.
• RMB remains a key concern for EM investors due to potential currency war implications.

Equities Performance

• US and European indices closed marginally lower on Friday due to Trump's tariff threats.
• Asian equities showed mixed performance, with the Shanghai Composite rising 2.05%, and TAIEX, KOSPI, and Hang Seng also up.
• Nikkei 225 fell 0.29% on Friday.
• Futures for the week suggest mixed sentiment, with Japan and Australia showing slight declines, while Hong Kong is expected to rise.

US Treasuries

• 3M US Libor remained stable at 2.34%, while 2-year Treasuries yield held at 2.59%.
• 10-year US Treasuries yield increased by 5 bps to 2.89%, contributing to the 10s2s yield spread recovering to 30 bps.
• The yield curve flattening remains a key concern for global investors.

Commodities

• Gold rose to $1,231.10/oz as the USD weakened.
• Brent crude oil climbed to $73.15/bbl.
• LME Copper consolidated around $6,050/MT.

Interest Rates

• USD Fed Funds Rate is at 1.75-2.00%, with the next meeting on 02 August.
• EUR Refinancing Rate is at 0.00%, with a meeting on 26 July.
• GBP Repo Rate is at 0.50%, with the next meeting on 02 August.
• AUD Official Cash Rate is at 1.50%, with the next meeting on 07 August.
• JPY remains at 0-0.10%, with the next meeting on 31 July.
• SGD 3-Mth SIBOR is at 1.63%.

Key Events & Market Holidays

• Thailand has holidays on 27 July (Asrnha Bucha Day) and 30 July (King's Birthday).
• Australia has a Bank Holiday on 06 August.
• Singapore has a National Day on 09 August.
• South Korea has Liberation Day on 15 August.
• India and Indonesia have Independence Day on 15 August.
• Philippines has Ninoy Aquino Day on 21 August and National Heroes Day on 27 August.
• UK has a Summer Bank Holiday on 27 August.
• Malaysia has a National Day on 31 August.

Disclaimer

• This document is for informational purposes only and does not constitute investment advice.
• No reliance should be placed on the views or information provided.
• The UOB Group may have positions or interests in the securities mentioned and is not liable for any losses or damages arising from reliance on this content.