ICE Futures Singapore
Monthly Report


June 2021
Gain a deeper understanding of emerging market trends, risks and opportunities with bitcoin, FX, equity and energy markets analysis. The Research Team at Traddictiv shares their views in this monthly report, , including statistics for active or passive traders and hedgers.
MACRO COMMENTARY
Bitcoin spent most of June range bound between $30,000 and $42,000 after the strong move in the 3rd week of May saw price fall more than 50% from the April all time high at $64,897.
  • MicroStrategy raised $500M in senior secured notes and used the proceeds to purchase 13,005 bitcoin for an estimated $489M according to MicroStrategy’s Chief Executive Officer Michael Saylor’s tweet on 21st June. The company’s holding of bitcoin totals 105,085 and worth over $3.2B at $30,000 making it the largest holder of the cryptocurrency of any other publicly listed company.
  • China-based bitcoin miners are closing their mining operations after China announced a ban on bitcoin mining.  The hashrate had fallen from 160 ExaHash/s to around 86 ExaHash/s which are levels not seen since May 2020.
The U.S. Dollar closed 2.9% higher in June at 92.43 after reaching a low of 89.54 at the end of May. Inflation concerns emerged fueled by higher commodity prices and economic recovery as the impact from Covid recedes allowing business to slowly open and people to travel for business and leisure.
  • The U.S. Federal Reserve announced mid-June in their Federal Open Market Committee (FOMC) statement their intention to raise interest rates late 2023 that led to a sharp rise in DXY from 90.50 to 92.43.
  • The inflation rate was 5% higher in May 2021 versus one year ago and is expected to be a factor as the economy recovers from the impact of Covid.
The Singapore Dollar closed the month under a key level $1.3525 ending weaker against the U.S. Dollar along with the other major currencies.
  • Finance ministers from the Group of Seven (G-7) rich nations reached an accord on 5th June supporting the creation of a global minimum corporate tax rate of at least 15 per cent which could have implications for multinational corporations with tax advantaged entities in Singapore.
The Chinese Yuan Renminbi held under $6.5000 ending weaker against the U.S. Dollar which would be seen as positive by China’s central bank authorities concerned with a strong yuan.
  • The People’s Bank of China (PBOC) announced a 200 basis point hike to the reserve requirement ratio (RRR) for foreign currency deposits to 7% from the current 5% with effect from 15th June to temper the pressure from the Chinese Yuan’s appreciation.
Technology stocks in Asia recovered well in June after weakness seen in the middle of May.
  • The value of stock market listings by Chinese technology companies dropped in the second quarter, as regulators in Beijing increased their scrutiny of well-known companies in the sector such as the ANT Group.
  • Semiconductor shortages have led to delays affecting multiple industries including car manufacturers, appliance makers and telecommunication companies.
Commodities continued their move higher in June including Brent crude oil which ended the month 8.0% higher versus May.
  • Brent crude oil has set three-month highs on higher commodity prices and continued demand resulting from the Covid vaccine roll out and government stimulus.
  • The potential return of oil supplies from Iran, should it reach a new nuclear deal with the US, will give OPEC a reason to proceed cautiously on production levels.
MONTHLY CHANGE
Source: Source: ICE Connect, ~30 Days

Important information: The information herein is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation.
MARKET FOCUS
U.S. DOLLAR INDEX® - DXY | SDXY
DAILY TREND: UP
From the 1st June low 89.66, DXY cleared the early June high set at 90.62 as the consumer price index rose 5% from a year ago highlighting inflationary concerns which could mean higher interest rates in the future. Price rallied strongly to close the month at 92.32 after the FOMC statement indicated increased rates in 2023.
SINGAPORE DOLLAR - USDSGD | SGD
DAILY TREND: UP
SGD weakened in June along with other major currencies on the overall strength of the U.S. Dollar.


UPCOMING HIGH IMPACT EVENTS
CHINESE YUAN RENMINBI - USDCNH | CNM
DAILY TREND: UP
CNH retraced close to the Fibonacci retracement level 61.8% in the month of June after strong appreciation pressure that began at the start of April and continued throughout May.
  • Fri 2 Jul Non-Farm Payrolls and Unemployment Rate
  • Thur 8 Jul FOMC Meeting Minutes
  • Tue 13 Jul 13 CPI
  • Fri 16 Jul Retail Sales
  • Thur 29 Jul FOMC Statement
Source: ICE Connect, FXStreet Economic Calendar
  • Wed 14 Jul GDP
  • Fri 30 Jul CPI
  • Fri 16 Jul GDP
U.S. DOLLAR INDEX® CORRELATIONS

The charts identify price turning points between U.S. DOLLAR INDEX®, Brent Crude Oil (BRN) and Bitcoin (XBT) which could be used to identify periods during which prices of each of the markets appear positively or negatively correlated.
BRENT CRUDE OIL (BRN): POSITIVE

Source: ICE Connect
NYSE® BITCOIN INDEX (XBT): NEGATIVE

ICE ASIA TECH 30 INDEX - ICEAT30 | ATI
DAILY TREND: UP
Price rebounded over the final week of June after prices retraced from the weakness experienced throughout the month of May.
BRENT CRUDE OIL - BRN | BM
DAILY TREND: UP
June continued to see weekly closes at higher prices above prior week’s closes.




UPCOMING HIGH IMPACT EVENTS
NYSE BITCOIN INDEX® - XBT | BMC
DAILY TREND: DOWN
Since the all-time high of $64,897 set in mid-April, prices had traded in a range between $45,000 and $60,000. In the 3rd week of May, price broke the prior high in a strong move to the downside, struggled to retrace and ranged at the lows. Indecision and overall weak price action continued into the final week of June.
  • Sat 31 Jul China and Japan Manufacturing PMI
Source: ICE Connect, FXStreet Economic Calendar
  • Thur 1 Jul 181st Meeting of the OPEC Conference
  • Sat 17 Jul 1 Grayscale Bitcoin Trust unlocking of approximately 16,000 bitcoins
ICE ASIA TECH 30 INDEX CORRELATIONS
The charts identify price turning points between the ICE Asia Tech 30 Index, South Korea’s KOSPI Composite Index (KOSPI) and Thailand’s SET Index (SET) which could be used to identify periods during which prices of each of the markets appear positively or negatively correlated.
KOSPI COMPOSITE INDEX (KOSPI): POSITIVE

Source: ICE Connect
THAILAND SET INDEX (SET): POSITIVE

PRODUCT HIGHLIGHT: MICRO ICE ASIA TECH 30 INDEX FUTURES
KEY ATTRIBUTES

Efficient access to a basket of technology and tech-related stocks across multiple markets in a single contract with a capital-efficient contract size of approximately US$10,000 (as of 13 July 2021) with Initial Margin of around US$463 (as of 05 July 2021).  Exposure is to a single currency in USD while covering a multitude of stocks denominated in currencies such as KRW, JPY, HKD and TWD.

The index is rebalanced quarterly to not only include highly-traded, liquid companies in Asia, but to also include companies in other sub-industries such as Consumer Discretionary and Media & Communications.

Brokers offering this product include KGI Futures and Phillip Futures.
TECHNICALS (DAILY)
Price rebounded over the final week of June after prices retraced from the weakness experienced throughout the month of May.

Source: ICE Connect
MONTHLY EDUCATIONAL BITES
Terminology and concepts of the financial markets and futures.
What is Hedging?
Hedging is the action taken through the use of a financial instrument to minimize the loss or risk of the loss of value of an asset due to adverse asset price movements.
Who are Hedgers?
Hedgers are market participants such as commodity producers who want to lock in selling prices of commodities they produce, or food manufacturers who want to lock in buying prices of raw materials purchased.

Market participants also include financial institutions handling financial assets and use derivative products such as futures to manage the risk of a portfolio of financial assets.
What is the difference between Physically Delivered vs Cash Settled Futures Contracts?
Physical delivery is a term in a futures contract which requires the actual underlying asset to be “physically delivered” upon the specified delivery date, rather than being traded out with an offsetting contract.

Cash settled futures on the other hand allows for the net cash amount to be paid or received on the settlement date of the futures contract.

Futures exchanges may offer both types of contracts to market participants who have different purposes for trading futures contracts.
Educational resources are available and provided by Traddictiv.
RISKS AND OPPORTUNITIES FOR CORPORATES AND INDIVIDUAL INVESTORS
Common application of financial market instruments for managing risk and opportunities.

Hedging
Hedging currency exposure with the Mini-U.S. Dollar Index® futures contract is an efficient way to self-manage your business’ currency risk by taking a directional position depending on your business requirements for conversions to or from the U.S. Dollar.

For example, if you were expecting the U.S. Dollar to weaken from 93.50 on 31st March based on an analysis involving the overall downward trend in the market having retraced to the Fibonacci retracement level 76.8% and had plans to convert U.S. Dollars to Singapore Dollars over the coming months to make payments to suppliers in Singapore Dollars, you could open a short position using the Mini-U.S. Dollar Index® futures contract at or around 93.50 to lock in the value of the U.S. Dollars that you plan to use in the future at the time of payment to the supplier.

Figure 1. Weekly Chart U.S. Dollar Index® , ICE Connect
Limitations
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To retail investors: Futures contracts based on bitcoin may pose specific risks. Such risks may arise from greater volatility in prices resulting from a range of factors. Those risks could in turn affect financial outcomes associated with maintaining required margins or any losses at final contract settlement.
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