Boris Johnson Dup’ed as Singapore Slings

Brexit has moved to the season finale it seems, with UK PM Boris Johnson due to present a newly minted withdrawal agreement to Parliament on Saturday for a vote.

The major sticking point from the British side appears to be the Democratic Unionist Party (DUP) from Northern Island and that pesky Irish border. Although a fringe party, thanks to electoral incompetence by the Conservative government, the DUP holds the balance of power and thus their voice counts much more than it otherwise would. Without them, the entire edifice crumbles, and we are back to the groundhog day Brexit extension and negotiation cycle.

Assuming they can be coaxed over the line, a vote will occur on Saturday. MP’s, having provided Britain with such quality leadership over the last three years, will be outraged at having to work in a Saturday. That comes with a price, as both major opposition parties have signalled they want a new referendum to ratify any deal passed by Parliament. A minority government in Westminster makes this a distinct possibility. Parliament, and not football, may top Saturday’s viewing figures. You can lead a parliament to the gin bar, but you can’t make it drink.

The trade dispute between the US and China continues to make its presence felt around the globe. Singapore’s balance of trade did not make pretty reading this morning. Although the surplus came in at S$3.8 billion, non-oil exports plunged 3.3% for September making a falling of 8.1% YoY.

As an open trading economy, the city-state is a bellwether for global trade, and these numbers and their implications do not make for pretty reading. It followed a dark and sombre tone from the IMF on the global economy yesterday. With an election due next year and the MAS having already eased policy this week, the government may well be looking into its goodie bag on the fiscal front. The beautiful thing is that Singapore is such a well-managed company; it has the financial resources to do just that.

The Singapore data does emphasise though, that the US-China trade dispute remains the single most crucial macro-economic factor for the world’s economic health. Both for the remainder of 2019 and probably most of 2020. A 10-year QE-induced bull run since the GFC where you could buy almost anything, and it would go up – even the We Company – had to come to an end at some stage, that is the cycle of life. The trade war’s continuance though, heightens dramatically, the risk of a sensible slowdown and correction becoming something much worse in 2020.

The Asian data calendar is bare today post the Singapore data with only UK retail sales and US initial jobless claims to distract the street from the US earnings season, now in full swing. Overnight, US retail sales fell 0.3%, the first drop in seven months. Mostly positive earnings reports offset it. Thus, heightened talk of a Federal Reserve rate cut at the end of the month remains premature. Retail sales themselves are a volatile data set, and with two rate cuts already working their way through the system, I still feel it unlikely the Fed will be panicked into another at months end.


Wall Street finished sideways overnight as the drop in retail sales was offset by mostly positive results from US company earnings. Netflix rose eight per cent as its increase in subscribers was less worse than forecast. Bank of America and Bank of New York Mellon both published solid results, showing that the all-important US banking sector remains in good health. The Fed Beige Book showed an increase in nervousness from US companies which is entirely understandable as the trade war drags on.

The S&P 500 fell 0.19%, the Nasdaq fell 0.3%, and the Dow Jones eased 0.07%, concluding a non-descript day for the major indices. The ASX 200 and Korean Kospi have both eased by just over 0.1% this morning with the Nikkei only just in the green, up 0.13%.

Regional markets are unlikely to trade with much direction following the Wall Street close, and with a lack of local data to get their teeth into. The exception appears to be Hong Kong’s Hang Seng, up 0.35% this morning, likely on the policy details regarding mortgage caps announced by the government yesterday.


Treasury yields fell in the US post the retail sales print, which undermined the US dollar overnight. The dollar index fell 0.3% to 98.00 as the dollar gave up ground against most majors.

The star of the show again was the British Pound (GBP), which climbed back on Brexit hopes. After a wild day ranging between 1.2650 and 1.2870 on the ebbs and flows of Brexit gossip, the GBP closed 0.36% higher at 1.2830, a daily close above resistance at 1.2800. Resistance levels above are 1.3030 and then 1.3200.

Trading the British Pound at the moment is not for the faint-hearted intra-day with deep pockets required. The street clearly wants to take GBP higher on any Brexit hope, but traders should be aware that the pullback will be equally as ugly if progress stalls or collapses yet again.


A weaker dollar supported oil overnight on a slow news day for energy. Even a gigantic rise in US API crude inventories to 10.5 million barrels couldn’t offset the lower dollar.

Oil rose initially in fact with WTI testing but failing just under $54.00 a barrel. The crude inventory numbers put paid to the rally, but Brent crude spot still closed 0.36% higher at $59.50 a barrel. WTI spot closed 0.1% higher at $53.00 a barrel.

The weak US retail sales and the Singapore export data appear to be weighing on crude in Asia though with both contracts lower by just over 0.50%. Worries over global growth are clearly on the minds of Asian traders, and the soft tone on oil is set to continue throughout the session.


Gold continues to be locked in a no-mans-land between $1480.00 and $1500.00 an ounce, entirely at the mercy of external drivers rather than gold fundamentals themselves.

A weaker dollar saw gold rise 0.65 to $1489.50 overnight in what was a non-descript session. The bigger technical picture suggests that a further correction lower is the probable course.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Jeffrey Halley

Jeffrey Halley

Senior Market Analyst, Asia Pacific
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley is OANDA’s senior market analyst for Asia Pacific, responsible for providing timely and relevant macro analysis covering a wide range of asset classes. He has previously worked with leading institutions such as Saxo Capital Markets, DynexCorp Currency Portfolio Management, IG, IFX, Fimat Internationale Banque, HSBC and Barclays. A highly sought-after analyst, Jeffrey has appeared on a wide range of global news channels including Bloomberg, BBC, Reuters, CNBC, MSN, Sky TV, Channel News Asia as well as in leading print publications including the New York Times and The Wall Street Journal, among others. He was born in New Zealand and holds an MBA from the Cass Business School.
Jeffrey Halley
Jeffrey Halley

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