Asian equity index futures are set to open mildly higher on Monday morning following a 1.5% rebound in S&P 500 index last Friday.

Volatility index – market’s ‘fear gauge’ - retraced from last week but still remains at elevated level of 26.0 area, comparing to average 10-12 a month ago. Market continues to balance the weight of another good earnings season against the impact of rising interest rates and shrinking liquidity as a result of economic expansion.

And the deleveraging among volatility-linked Exchange Traded Products (ETPs) that are set to unleash billions of equity sales has exerted negative impact to the markets, reinforcing the sell-off via algorithm trading. Before the volatility-induced sell-off tapers and value investors step in to ‘buy on dips’, markets are likely to continue to ride volatile waves.

Singapore’s Straits Times Index opened marginally higher this morning to 3,383 area. Singapore Exchange’s share price tumbled over 7% to S$7.3 area largely due to the news that Indian bourses will stop licensing Index, stock prices to foreign exchanges, which will impact SGX’s popular index future Nifty 50 and other Indian linked futures and options.

The freefall of the US dollar has finally come to the ground. After two-month of declining, the US Dollar Index March contract has bottomed up at around 88-89 area and since rebounded to 90.2. Trend Indicator SuperTrend (10,2) has flipped upward for the first time since end December, with 10-Day Simple Moving Average Line sloped upwards. Both suggest the trend has turned bullish.

Fundamental reasons are also supportive for a stronger dollar, with robust job market and inflation outlook the key drivers for more rate hikes this year. Tax reform and infrastructure spending are potential boost to the US economy and will attract more overseas fund to be repatriated back to the State – all suggesting stronger currency.

EUR/USD has retraced to a 100% Fibonacci Extension level of 1.228 area, with its immediate support and resistance level at 1.220 and 1.238 area respectively. The trend has turned bearish with its SuperTrend and 10-Day SMA both flipped downward. USD/JPY has found strong support at 109.0 area and its near term trend has turned bullish. The next key resistant level can be found at around 111.3 area.

US Dollar Index – Mar 2018


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