EQUITIES
Asia-Pacific markets traded mostly higher on Monday. The Shanghai composite rose more than 1%, while Hong Kong Hang Seng index added 0.65%. Australia’s benchmark ASX 200 gained 0.06%, and the S&P BSE Sensex in India advanced 0.27%. The South Korea’s KOSPI bucked the overall trend to trade 0.19% lower.
There was no trading in Tokyo on Monday with Japan shut for a national holiday. Singapore markets were also closed for public holiday.
OIL
Oil prices dropped on Monday, extending last week's steep losses on the back of a rising U.S. dollar and concerns that new pandemic curbs in Asia that may set back the global recovery in fuel demand.
The Brent last traded at $69.44 per barrel, while U.S. crude futures traded at $66.96 per barrel. On closing last Friday, the Brent settled at $70.70 a barrel, and the WTI ends at $68.28 per barrel.
CURRENCIES
The labour data Friday boosted the dollar and benchmark U.S. 10-year Treasury yields on Monday.
Yields on U.S. 10-year notes were up at 1.30%, having hit their lowest since February last week at 1.177%. The jobs data also took the U.S. currency index to 92.767, although slipping from an earlier 2-week top of around 92.921.
GOLD
Gold tumbles to a more than 4-month low as robust U.S. jobs data stoked fears that the Fed would raises rates quicker than expected, increasing the opportunity cost of holding non-interest bearing bullion.
Spot gold fell to $1,745.70 per ounce. Earlier in the session, prices touched $1,684.37 to trigger a stop-loss sales, their lowest since March 31.
U.S. gold futures slipped 1.2% to $1,741.90.
Silver slumped as much as 7.5% hitting a more than 8-month low of $22.50 per ounce earlier in the session. It was last down 1.7% at $23.91. Platinum fell to $971.60, having earlier hit a low since November 2020 of $959.93. Palladium flat at $2,625.50.
ECONOMIC OUTLOOK
Asian shares fought back from early losses on Monday as sharp falls in gold and oil prices briefly spooked sentiment, while the dollar reached four-month highs on the euro after an upbeat U.S. jobs report lifted bond yields.
Investors were still assessing whether Friday's strong U.S. payrolls report would take the Fed a step nearer to winding back its stimulus. Friday's non-farm payroll report showed jobs increased by 943,000 in July compared with the 870,000 forecasts. Numbers for May and June were also revised up.
The Fed has made the labour market recovery a condition of tighter monetary policy, and most officials back the view that a jump in inflation will prove transitory, though there is debate over how prolonged it could be.
Traders will be keenly watching a U.S. CPI report on Wednesday to confirm inflation has peaked. There are also four Fed officials speaking this week and will no doubt offer their own take on tapering.
Important U.S. economic data being released this week including the JOTLs job openings, CPI & PPI prices, Treasury budget, and imports/exports prices. For the European market, the Germany economic expectation and UK growth are watched. Also scheduled for the week are the IEA oil market report and OPEC monthly report.
TECHNICAL OUTLOOK
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 110.361 and 110.478.
- Support line of 110.127 and 110.010.
Commentary/ Reason:
The dollar is steady against the Japanese yen on Monday, traded at 110.188 yen and away from last week's trough of 108.722.
An encouraging U.S. jobs data Friday gave dollar a decent recovery, as traders positioned for an earlier tapering of Federal Reserve stimulus.
The yield on the 10-year US Treasury note that is higher, also lending support for the greenback.
Trading for the pair however expected to be thin today following a public holiday in Japan.
Intraday bias in USD/JPY remains on the upside for 110.36 resistance. Stronger rise would then be seen to retest 110.48 high on short-term basis. On the downside, though, below 110.12 minor support will bring retest of 110.01 support instead.
