Singapore market trends Monday: Traders to eye US dollar, trade talks

Singapore CBD skylineSingapore CBD skyline

Singapore’s shares may face caution on the first day of a holiday-interrupted week, with the level of the U.S. dollar spurring concerns and U.S.-China trade talks, which will begin later this week, set to be closely watched.

Singapore’s market will be closed Wednesday for a holiday.

“As we roll into a new week for financial market participants, the question of where to for the U.S. dollar continues to be a dominant theme,” Chris Weston, head of research at Pepperstone Group, said in a note on Monday.

Japan’s Nikkei 225 index was down 0.13 percent in early trade.

The Straits Times Index ended Friday down 0.08 percent at 3209.44; August futures for the index were at 3209 on Friday, while September futures were at 3211.

On Wall Street on Friday, the Dow Jones Industrial Average ended up 0.43 percent at 25,669.32, the Nasdaq rose 0.13 percent to 7816.33 and the S&P 500 tacked on 0.33 percent to 2850.13. Futures for the three indexes were pointed nose up early on Monday.

China’s CSI 300 index ended Friday down 1.44 percent at 3229.62.

Signs of erratic behavior from the White House

Traders may also take a note of caution amid signs of erratic behavior from U.S. President Trump after he took to Twitter to launch yet another angry tweetstorm over the weekend.

In part, Trump’s angry missives were aimed at a New York Times scoop that White House lawyer Donald McGahn had cooperated extensively in at least three interviews with special counsel Robert Mueller, specifically relating to episodes over whether the president and his aides tried to obstruct justice.

Currencies

The U.S. dollar index was at 96.13 at 8:10 A.M. SGT, off levels as high as 96.57 on Friday, but still around levels last seen in mid-2017, according to ICE Futures data.

The 10-year U.S. Treasury bond yield was at 2.87 percent at 8:20 A.M. SGT, off levels as low as 2.846 percent on Friday.

“Perhaps the new development late last week was the emergence of profit taking from U.S. dollar longs across G10; a trade which is certainly crowded after the U.S. dollar index rallied 8.7 percent since mid-April,” Weston said. “U.S. dollar inflows have been largely premised on the relative outperformance of the U.S. economy. However, given the moves and Fridays price action, it is clear the bar to move the U.S. dollar is sufficiently high enough that U.S. economic data now needs to not only beat expectations, but it really needs to blow the consensus out of the park, while economic data in other economies need to perform poorly.”

The euro/dollar was at 1.1437 at 8:23 A.M. SGT, off levels as low as 1.13 last week, according to DZHI data.

The dollar/yen was at 110.461 at 8:24 A.M. SGT, after trading in a 110.28 to 111.052 range on Friday, according to DZHI data.

The Singapore dollar continued last week’s strengthening trend. The dollar/Sing was at 1.3708 at 8:25 A.M. SGT, after trading in a 1.3702 to 1.3763 range on Friday, with the pair climbing as high as 1.3819 last week, according to DZHI data.

Turkish lira

The Turkish lira continued to inch back some of its recent tumble. The dollar/lira was at 5.9948 at 8:26 A.M., after trading as high as 7.2149 last week, according to DZHI data.

Weston said the dollar/lira would get attention from traders with an elevated risk tolerance, noting the pair had weakened on conflicting headlines around the potential Turkey might release American Pastor Andrew Brunson and a one-notch ratings downgrade from S&P.

“While headlines risk remains, let’s not forget that on 3 September, Turkey release its inflation report, and the prospect of a further increase headline inflation from 15.9 percent is real,” Weston said. He added that if inflation rises above its seven-day repo rate of 17.75 percent, it points to one of Turkey’s key issues: “Monetary policy settings are still too accommodative to really attract TRY inflows and to radically alter the path of USDTRY.”

Oil

Nymex WTI crude oil futures for September were down 0.08 percent at US$65.86 a barrel at 8:15 A.M. SGT, while ICE Brent crude futures for October were down 0.13 percent at US$71.74, according to Bloomberg data.

Read more: Crude oil set for bumpy week as currency volatility hits

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