Asian equity markets traded quietly on Monday, probably due to lack of fresh catalysts after the earnings season.

The Shanghai Composite climbed 0.64% while the Hang Seng Index lost 0.22% in the last trading hour. The Nikkei Index fell 0.5% on a stronger yen. Singapore’s Straits Times Index wobbled around 2,767 points.

In the near term, a lot of pessimism has been priced in and the market may see some stabilisation or be range bound this week due to a relatively quiet event calendar.

Singapore’s CPI fell by 0.5% year on year in April, extending its negative path for the 18th consecutive month. This is also the longest stretch on record. The drop in private road transport, fuels and utilities are the main contributors to lower CPI. Food and education costs, on the other hand, have increased by 2.3% and 3.1% respectively.

The Core CPI, which strips out the cost of accommodation and private road transport, has risen 0.8% year on year due to higher service costs. This is generally in line with the MAS’ forecast of a 0.5-1.5% range for this year. USD/SGD was little changed around the 1.3800 area on Monday.

FX
USD/JPY has retraced further to 109.30 this morning from its three-week high of 110.16. The immediate support and resistance levels for USD/JPY are 111.00 and 108.30 respectively. EUR/USD has found some support at the 1.1200 area, as shown in the graph below. Breaking down this key support will probably indicate further downside towards 1.1080.

Commodities
Crude oil prices dropped for a fourth day from seven-month highs. WTI crude oil futures opened at $48.08 today and slid to the $47.90 area this morning. The correction was believed to be a result of the resumption of Canadian oil output, as well as expectation of rising production in Iran. A stronger US dollar continued to extend pressure on commodity prices, as gold and silver both slid further on Monday.

EUR/USD


Key technical levels to watch:

  • 50-SMA sloping upward
  • Testing the lower end of the channel
  • 33% RSI indicates short-term oversold
  • MACD  formed negative divergence

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