Chinese central bank unexpectedly announced that it would cut the Required Reserve Ratio (RRR) for targeted banks by 50bps, in an attempt to cushion the downside of economic slowdown amidst rising trade tension.

This measure will unlock as much as US$108 billion of liquidity into the economy, especially targeting those smaller companies which have poorer access to credit supply. This move comes after crash in China stock market last week following escalating trade disputes with Washington.

Asian futures suggest a mixed opening today. USD/JPY is trading lower to the 109.62 area and US equity futures are dropping, suggesting that market is still very much concerned about the economic outlook despite of PBoC’s easing moving over the weekend.

Upbeat PMIs sent euro and stocks higher

EUR/USD rebounded on Friday to 1.166 area, underpinned by better-than-expected June manufacturing data from euro zone’s largest economies. Risk sentiment improved across equity markets on macro-data, and trade tension faded with China and US trying to restart trade negotiations before President Trump’s tariffs come into effect early next month.  

Crude oil prices opened lower this morning, erasing some gain from last week’s news that OPEC countries came to a preliminary agreement to increase output by 1 million barrels per day. This removed the uncertainty around how things are moving among the world’s top oil producers. Technically, however, the bearish trend of crude oil prices remain intact. As shown in the chart below, Brent’s SuperTrend (10,2) and 10-Day SMA are both sloped downwards, suggesting more downside in the days to come unless these two indicators make a turnaround.

USDollar Index came down from its 12-month high, fuelling a rebound in metal prices and commodity currencies such as AUD and CAD.

In Singapore, the Straits Time Index broke down an important support level of 3,300 and closed at 3,290 area on Friday. Its next major support level could be found at the 3,200 area. Singapore’s listed telco players suffered from heavy selloff on the debut of island country’s fourth telco player- MyRepublic.

Crude Oil Brent - Cash

By Margaret Yang in Singapore

 

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. CMC Markets is regulated by the Monetary Authority of Singapore.