April 13, 2016

Key overnight events:

  • WTI futures expiring in May jumped 4.5% to $42.17/bbl, settling above $42/bbl the first time this year and capping an 18%-rally in the space of a week. Oil rallied after Russia’s Interfax news agency reported Saudi Arabia and Russia had reached a consensus on an oil freeze during talks on Tuesday, citing an unidentified “informed diplomatic source” in Doha. The gains extended as Kremlin Press Secretary Peskov said there is hope for a deal in Doha regardless of whether Iran joins in.
  • The S&P 500 Index climbed 1.0%, as energy stocks led gainers. The strong rally in oil helped commodity currencies to strengthen against the US dollar, with the Canadian and Australian dollars in particular both gaining strongly.
  • The IMF raised China’s growth forecast by 0.2% to 6.5%, even as it made expected cuts to global outlook. In its quarterly update, the IMF added that the world economy will grow 3.2% this year, down from the projected 3.4% in January, as weak exports and slowing investments dim prospects in the US, a consumption-tax hike saps growth in Japan, and a slump in in prices from oil to wheat continues to hobble commodity producers. Its chief economist warned of the risk of the world sliding into stagnation.
  • US import prices in March rose 0.2% month-on-month, missing the forecasted 1.0% but rebounding from the prior month’s figure of -0.4%.

 

USDSGD:

  • Spot 1.3459
  • MAS may refrain from easing tomorrow, as widely expected, thus leaving the slope and centre of its target band for the Singapore dollar unchanged.
  • USDSGD remains supported at the 1.3415 level, and looks likely to remain between 1.3415 – 1.3500 at least until tomorrow’s policy decision.
  • 1Q GDP is forecasted to rise 1.7% year-on-year tomorrow.

 

AUDUSD:

  • Spot 0.7702
  • The overnight rallies of oil and iron ore have pushed AUDUSD back above 0.7700 for the first time since 1st Apr.
  • Continued strength in both commodities should result in AUDUSD surging past the current resistance of 0.7723 and towards the next level of 0.8000.
  • Australia’s jobs report for March is due for release tomorrow. Employment change is expected to improve to 17,000 from 300, while the unemployment rate is forecasted to increase by 0.1% to 5.9%.

 

USDCAD:

  • Spot 1.2753
  • Driven by the jump in oil prices, USDCAD broke below the significant 1.2832 level and should next pause for some support at the 1.2363 level.
  • However, an unexpected rate cut or dovish statements by policy makers at the Bank of Canada’s policy meeting tonight could derail USDCAD’s current downward trend.

 

USDCNH:

  • Spot 6.4731
  • China’s exports in March beat expectations, rising 18.7% year-on-year in yuan terms and 11.5% year-on-year in dollar terms, comfortably better than the expected 14.9% and 10.0% respectively and rebounding from a drop in exports the previous month.
  • March imports fell from a year earlier, dropping 1.7% in yuan terms and 7.6% in dollar terms, although both readings came in better than the estimated declines of 4.8% and 10.1% respectively.
  • The positive trade data suggests China’s economy may have fared better than expected in the first quarter of this year, with 1Q GDP due for release this Friday forecasted to show a 6.7% year-on-year expansion.
  • USDCNH remained largely unchanged, fluctuating around its previous session’s close of 6.4708.
  • The PBOC lifted its yuan fixing to the highest level since Apr 1st at 6.4591.

 

USDNOK:

  • Spot 8.1727
  • Norges Bank Governor Olsen said last night said that the possibility of negative interest rates cannot be excluded.
  • USDNOK declined to a year-to-date low of 8.1278 earlier yesterday before paring declines back above 8.1500.

 

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