US dollar index plunged over one percent overnight, extending its southbound journey following US Treasury secretary Mnuchin said that weaker dollar is good for US trade – a comment that is viewed as Washington’s bias towards weaker currency in order to boost US exports and economy.

This is in line with President Trump’s favour as he also mentioned many times in public that a strong dollar is ‘killing us’. Amid rising trade tensions between US and China after the White House imposed tariffs on solar cell and washing machine imports, diving dollar is likely to defend US economy and hurt China in multiple ways.

No doubt, a weaker currency not only helps the exporters and manufactures, but also boost the US stock market, as nearly half of S&P 500 companies’ revenue are from overseas. Their overseas earnings enjoys favourable translation gains when the US dollar is weakening. Furthermore, weaker currency hurts US’s largest debtors namely China and Japan, who are holding trillions of dollars US treasury bills, which are depreciating in their value. 

Technically, the dollar index is trending lower in its 5 mins chart overnight, with 50-session SMA and SuperTrend (10, 5) forming strong resistance levels. EUR/USD surged into the 1.240 area – a fresh three year high. Technically, EUR/USD is riding a strong uptrend and MACD is attempting higher highs. The immediate support and resistance levels could be found at around 1.238 (127.2% Fibonacci) and 1.251 (161.8% Fibonacci) area respectively.

US Dollar Index – Mar 2018 (5 mins)

In Asia, Hong Kong market experienced some mild correction yesterday as the recent rally attracted profit-taking activities. In China A share market, however, some unusual movements in the small-cap technology companies were observed, with the ChiNext Index – a NASDAQ-style board of the Shenzhen Stock Exchange - soared nearly 2% with trading volume nearly doubled its daily average. Sectorial rotation could probably explain this as the large cap financial stocks have outperformed smaller cap over the last 12 months and now small players need to catch up with the rally.

In Singapore, the Straits Times Index broke out 2,600 points for the first time in a decade. Market sentiment remains positive and valuation is not too high yet. Today investors are eyeing on earnings release from Keppel Corp, CapitaLand Commercial Trust and A-REIT to paint a clearer picture of future outlook.

Singapore Earnings update:

CapitaLand Mall Trust

  • Overall:  in line with expectation
  • 4Q net property income up 2.6% yoy
  • Distribution per unit (DPU) at 2.90 cents, up 0.9% yoy. This translates to annualised distribution yield of 5.61%.
  • Portfolio occupancy rate remains high at 99.2%, but challenges remains in the retail mall space with rising competition and new retrial space coming on stream.

 

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