Singapore market trends Monday: US dollar loses ground amid dovish Fed signals

SGX ticker at Shenton Way building in Singapore; taken October 2018.SGX ticker at Shenton Way building in Singapore.

Singapore shares will open to mixed signals on Monday, with the U.S. dollar losing ground amid concerns over U.S. economic growth ahead, even as early Asian markets opened higher.

“Investors are bailing out of U.S. dollars and their recent moves are important because some of the factors that drove the dollar higher this year are beginning to change,” Kathy Lien, managing director of foreign-exchange strategy at BK Asset Management, said in a note on Friday U.S. time.

She said the four main drivers of the greenback’s rise this year — economic outperformance, rising interest rates, equity market pressure and trade policy — appeared to be fading with recent Federal Reserve officials’ comments sounding less hawkish.

U.S. Federal Reserve Vice Chair Richard Clarinda, in comments to CNBC on Friday, said that interest rates were nearing the neutral level, while Dallas Fed President Robert Kaplan on Friday also indicated, in a Fox Business News interview, that the U.S. economy will face headwinds next year, according to Reuters report.

Is another risk-off bout looming?

In addition, Stephen Innes said on Monday that any pause in the Fed’s hiking cycle would be a “very strong ‘canary in the coal mine’ type of signal,” which could spur a further correction in U.S. equity markets.

He added that the markets will continue to face U.K. political drama as Brexit deadlines near.

“For no other reason than year-end self-preservation, the markets risk profile will continue to drop as political risk continues to permeate virtually every pocket of the globe. As such, traders will be in risk reduction mode suggesting a high level of indifference will creep into the playing field as year-end musings leak into the equation,” Innes said.

Indexes

Japan’s Nikkei 225 Index was up 0.66 percent in early trade, while the Kospi gained 0.43 percent by 8:06 A.M. SGT.

Singapore’s Straits Times Index ended Friday up 0.95 percent at 3083.60; November futures for the index were at 3084 on Friday, while December and January futures were at 3082 and 3084 respectively.

Hong Kong’s Hang Seng Index was up 0.31 percent at 26,183.529 at Friday’s close, while China’s CSI 300 was up 0.47 percent at 3257.674.

Malaysia’s KLCI ended Friday up 0.72 percent at 1706.38, while Indonesia’s IDX Composite rose 0.95 percent to 6012.35.

The Dow Jones Industrial Average gained 0.49 percent to 25,413.22 on Friday, the Nasdaq Composite was down 0.15 percent at 7247.873 and the S&P 500 rose 0.22 percent to 2736.27. Futures for the three indexes were lower in early trade on Monday.

Currencies

The U.S. dollar index, which measures the buck against a basket of currencies, was at 96.43 at 7:04 A.M. SGT on Saturday, dropping from levels as high as 97.02 in Friday’s session, according to ICE futures data. It was at 96.418 at 7:36 A.M. SGT on Monday, according to Bloomberg data.

The 10-year U.S. Treasury bond yield was at 3.066 percent at 7:59 A.M. SGT Saturday, dropping from as high as 3.121 percent early in Friday’s session, according to Tullett Prebon data.

The euro/dollar was at 1.1412 at 7:54 A.M. SGT after trading in a 1.1318 to 1.1420 range on Friday, according to DZHI data.

The dollar/yen was at 112.729 at 7:54 A.M. SGT after trading in a 112.62 to 113.613 range on Friday, according to DZHI data.

The dollar/yuan ended Friday at 6.9366 after trading in a 6.9283 to 6.9504 range on Friday, according to DZHI data.

The dollar/Singapore dollar was at 1.3730 at 7:54 A.M. SGT after trading in a 1.3711 to 1.3769 range on Friday, according to DZHI data.

The dollar/Malaysian ringgit ended Friday at 4.1900 after trading in a 4.1850 to 4.1920 range on Friday, according to DZHI data.

The dollar/Indonesian rupiah ended Friday at 14,608 after trading in a 14,608 to 14,649 range on Friday, according to DZHI data.

Oil

Nymex WTI crude oil futures for December were up 1.01 percent at US$57.03 a barrel at 7:27 A.M. SGT, while ICE Brent crude oil futures for January were up 0.78 percent at US$67.28 a barrel and 7:27 A.M. SGT, according to Bloomberg data.

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