Singapore market trends Tuesday: US dollar eyed after Trump criticizes Fed

Sentiment in Singapore’s shares may be dim on Tuesday, ahead of a holiday on Wednesday, as the U.S. dollar took a hit from U.S. President Trump’s criticism of the U.S. Federal Reserve, a tactic unheard of in recent governance.

In a Reuters interview with Trump on Monday, the U.S. president said he was “not thrilled” with the Fed for raising interest rates and said the central bank should “given some help” to boost the economy.

“It’s not just Jerome Powell and the Fed that Trump has taken aim at and we can see China, Europe, Turkey, Iran and even large tech have caught his attention. Still, his views on the Fed’s path to normalisation are really the ones which have caught trader’s attention, although his influence on the U.S. dollar should be short-lived and it would also be huge surprise if Jerome Powell fired back at the president in his speech at Jackson Hole this Friday,” Chris Weston, head of research at Pepperstone, said in a note on Tuesday. 

Japan’s Nikkei 225 index was down 0.58 percent in early trade on Tuesday.

The Straits Times Index ended Monday down 0.147 percent at 3204.71; August futures for the index were at 3205 on Monday, while September futures were at 3206.

China’s CSI 300 index ended up 1.17 percent at 3267.25, while Hong Kong’s Hang Seng Index ended Monday up 1.41 percent at 27,598.02.

The Dow Jones Industrial Average ended Monday up 0.35 percent on 25,758.69, the Nasdaq edged up 0.06 percent at 7821.006 and the S&P 500 rose 0.24 percent at 2857.05. Futures for the three indexes were nosing down.

Sentiment may also be dented by another series of erratic Twitter posts from Trump, which included broadsides at former CIA Director John Brennan, Special Counsel Robert Mueller and former associate deputy attorney general Bruce Ohr.

Currencies

The U.S. dollar index was at 95.74 at 8:03 A.M. SGT, after touching levels as high as 96.37 on Monday and 96.57 on Friday, according to ICE futures data.

The 10-year U.S. Treasury note yield was at 2.821 percent at 8:14 A.M. SGT, a tad off a low of 2.816 percent on Monday, but still below trade as high as 2.867 percent overnight; bond yields move inversely to prices.

“This is the second time that we’ve heard the President lament about Fed tightening and theoretically, his views are not supposed to affect monetary policy. However if the central bank raises interest rates next month but fails to commit to a fourth hike, there’s no doubt that some market participants will attribute that to pressure from the President regardless of whether its true,” Kathy Lien, managing director of foreign-exchange strategy at BK Asset Management, said in a note on Monday U.S. time.

But she added, “the real reason why the dollar is down today is because Treasury yields continued to fall and Fed President Bostic said he favors only three rate hikes this year, encouraging traders to cover their short positions in euro, sterling and other beta currencies.”

Euro

The euro/dollar was at 1.1495 at 8:16 A.M. SGT, with the pair extending its rise over the past few sessions; on Monday, it traded in a 1.1393 to 1.1491 range, according to DZHI data.

“The rally was driven by the combination of U.S. dollar selling, short covering and the relief that Italian bond yields fell sharply after rising steadily for the past two months,” Lien said.

The dollar/yen was at 109.891 at 8:18 A.M. SGT, after trading in a 109.99 to 110.685 range on Monday, according to DZHI data.

The Singapore dollar continued to flex its muscles. The dollar/Sing was at 1.3685 at 8:19 A.M. SGT, compared with last week’s high of 1.3819, after setting a 1.3690 to 1.3728 range on Monday, according to DZHI data.

The Turkish lira walked back a bit of its recent recovery. The dollar/lira was at 6.0716 at 8:20 A.M. SGT after trading in a 5.9530 to 6.1994 range on Monday, according to DZHI data. The pair traded as high as 7.2149 last week, the data show.

Oil

Nymex WTI crude oil futures for September were up 0.33 percent at US$66.65 a barrel at 7:28 A.M. SGT, while ICE Brent crude oil futures for October were up 0.53 percent at US$72.21 a barrel at 6:00 A.M. SGT, according to Bloomberg data.

Read more: Crude oil prices seen steady in Asia ahead of API estimates

 

 

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