SGD

• Shaky sentiment. A better than expected US ADP employment report pushed up US bond yields. This supported the USD & weighed on equities.• AUD weaker. Negative risk sentiment & a stronger USD have exerted more pressure on the AUD. We think this can continue near-term.• Seasonal forces. August tends to be a negative month for growth-linked assets like the AUD. With the USD typically strengthening at this time of year. Risk sentiment remained negative overnight. Yesterday’s news that ratings agency Fitch had downgraded the US’ sovereign credit rating somewhat dampened risk appetite, though it was another strong US ADP...

• Mixed signals. Equities & bonds consolidate. Commodities firmer. In FX, the JPY has weakened, while the AUD has outperformed.• AUD rebound. More reports out of China pointing to growth-supportive measures coming through have boosted the AUD in the lead up to today’s RBA decision.• Hike or hold? There are arguments for & against a move. Markets & analysts are split. Given pricing a hike could see the AUD spike higher, but it may not last. It was a quiet end to the month for most markets. US equities edged higher (S&P500 +0.2%), bond yields consolidated (US 2yr and 10yr...

• Positive sentiment. Softer US price & wage data supported risk appetite. Equities & commodities firmer, US yields lower. FX was more mixed.• BoJ tweak. BoJ adjusted its yield curve control framework. Based on further steps & improvement in other fundamentals we see the JPY strengthening over time.• RBA in focus. Will they hike or hold? Analyst community is leaning towards a move. Markets are less convinced. A change would generate a knee-jerk AUD lift. Risk sentiment ended last week on firmer footing, although FX markets moved a bit more to the beat of their own drum. US equities rose...