MKS PAMP Group - Daily Asia Wrap

Range Asian Hours (from Globex open)
|--------------+--------------+--------------+--------------+--------------|
|              |     GOLD     |    SILVER    |   PLATINUM   |  PALLADIUM   |
|--------------+--------------+--------------+--------------+--------------|
|     OPEN     |  1209.60/90  |   17.10/12   |    997/99    |    788/90    |
|--------------+--------------+--------------+--------------+--------------|
|     HIGH     |  1210.10/40  |   17.11/13   |    997/99    |    790/92    |
|--------------+--------------+--------------+--------------+--------------|
|     LOW      |  1205.50/80  |   17.04/06   |    992/94    |    787/89    |
|--------------+--------------+--------------+--------------+--------------|
|  LAST LEVEL  |  1205.50/80  |   17.05/07   |    993/95    |    788/90    |
|--------------+--------------+--------------+--------------+--------------|




MACRO: U.S. home sales contracted during December, outpacing expectations
to decline -1.6% MoM (exp: -2.8%) to follow an upwardly revised November
print of +1.4% MoM (prev: +0.7%). The December slump took the number of
sales to a seasonally adjusted annual rate of 5.49 million (exp: 5.52
million) from 5.65 million previously, as higher mortgage rates and home
prices combined with record low inventory levels weighed upon sales. The
median sales price increased +4% YoY to USD $232,200, while inventory
collapsed -11% to the lowest level since records began in 1999. At the
current sales pace, it would take just 3.6 months to exhaust the supply of
existing homes. Markit’s 'flash' U.S. Manufacturing Purchasing Managers’
Index pushed higher during January, increasing to 55.1 (prev: 54.5), to
mark the strongest reading since March 2015. The January print was largely
driven by a 22-month high to output and a 28-month high for new orders.
Companies raised their purchasing activity at the steepest rate since early
2015 and increased their payrolls further in order to meet greater
production requirements. Chris Williamson, Chief Business Economist at IHS
Markit commented with the release, “US manufacturers are seeing a bumper
start to 2017, with production surging higher in January on the back of
rising inflows of new orders. New work is growing at the fastest rate for
over two years, thanks mainly to rising demand from customers in the home
market. Export growth remains subdued, stymied by the strong dollar. The
survey results suggest that faster manufacturing growth and inventory
rebuilding should help boost GDP in the first quarter if current trends
persist in coming months. Rising factory employment should also help
improve consumer morale and spending. However, with such strong growth
being signalled and price pressures rising, speculation around the next Fed
rate hike will intensify.” The Richmond Fed composite manufacturing index
improved to 12 (exp: 7) from 8 the month prior. Employment ticked higher,
however the average work week, although continuing to grow, was not as
prevalent as December's growth and increases in manufacturing wages were
less widespread than in December. Equity markets in the U.S. were buoyed by
positive earnings results overnight, turning higher as the S&P 500 and the
Nasdaq both ended at fresh record closing levels. The DJIA added +0.57% to
end the session at 19,912.71 points and inch ever closer to the
psychological 20,000 point mark, while gains to materials (+2.53%) and
financials (+1.21%) saw the S&P 500 add +0.66%. The Nasdaq Composite
outperformed to end +0.86% higher. Markets across Europe ended trade mixed
on Tuesday, following a British court ruling stipulating that the U.K.
Government must consult lawmakers before starting the Brexit process,
however this excludes consultation with the governments of Scotland,
Northern Ireland and Wales. The German Dax led markets higher to add +0.43%
following a better than expected manufacturing PMI print, while the Europe
Stoxx 600 tacked on +0.25% and the U.K. FTSE 100 edged -0.1% lower as BT
Group tanked -21% after announcing a larger than expected write-down. The
USD found support overnight from a modest short covering rally following
recent weakness, seeing the DXY index +0.36% higher. Treasury yields moved
higher in the U.S. overnight, taking the 10-year around 7 bps higher to
2.46%, its largest daily increase since early December, while the 30-year
also gained around 7bps to 3.05%. Oil futures pared gains late in trade on
Tuesday, closing generally flat for the session.


PRECIOUS: Gold saw whippy price action during trade on Tuesday, once again
failing to break through offers toward USD $1,220 and succumbing to USD
strength late in trade to fall below USD $1,210. Early session bids out of
Asia took the metal to a USD $1,219.90 high, however as we have seen in
recent sessions, offers around the resistance level restricted any further
top-side gains to hold the metal between USD $1,215 - $1,220 with modest
Chinese demand still evident leading into New Year celebrations. A leg
higher to USD/JPY back toward 113.50 in early European trade pressured gold
to a test of USD $1,210, before interest around the PM auction saw the
metal as high as USD $1,217.80 in New York. The early New York bid tone
soon ran out of puff with ETF's seeing outflows once again, and gold was
offered lower amid further USD strength to end the session -0.4% off the
pace. Aside from a sharp run higher in early New York trade, silver traded
well offered throughout Tuesday's session, once again unable to break
through USD $17.30 and ending the session toward support at USD $17 to book
a modest decline. The main price action overnight was found in platinum and
palladium, soaring higher in New York as President Trump sat down with U.S.
automakers to persuade manufacturers to keep production within the U.S.
Platinum briefly traded above USD $1,000 to end the session +1.8% higher,
while palladium outperformed to add 2.22%


ASIA TODAY: Gold struggled to regain the overnight declines during Asian
trade today, unable to capitalise on a softer USD with Chinese physical
demand beginning to wain as we head ever closer to the New Year holiday
period. The metal is precariously placed underneath USD $1,210 and looks to
be moving away from its recent strong correlation to USD flows,
particularly with regards to top-side moves. As Chinese interest is removed
from the market and investor confidence shows signs of jitters following
the recent failed tests of USD $1,218 - $1,220, we may soon see a test
through USD $1,200 to support initially at USD $1,195 and below this USD
$1,182 - $1,185. Silver also struggled to garner bids during Asian trade
today following the overnight weakness, unable to make headway above USD
$17.10 and looking likely to test USD $17, while below this support sits at
USD $16.80. There was little to report in PGM's today, following the
overnight gains the metals spent the Asian session consolidating in tight
respective ranges. In currency majors the USD eased to see USD/JPY pull
back toward 113.50 following an early session test of 114.00. Data releases
tonight includes German IFO survey results and U.S. House Prices.