Key overnight events:
- US retail sales in March dropped 0.3%, missing the estimated increase of 0.1% and worse than the prior month’s drop of 0.1%. PPI fell in March as well by 0.1%, worse than the expected 0.2% gain and continuing its deterioration from last month’s fall of 0.2%.
- The S&P 500 Index rose 1.0% to its highest level since 4th Dec, building on Tuesday’s 1%-rally and shrugging off poorer retail sales and PPI numbers. Investors instead chose to focus on yesterday’s positive Chinese trade data and last night’s better-than-expected earnings results from JP Morgan.
- WTI front-month futures declined 1.3% back below $42/bbl, as conflicting reports emerged over Iran’s attendance at this Sunday’s Doha meeting. US dollar bulls took control overnight, as the Bloomberg Dollar Index had its sharpest increase in 3 weeks, rallying 0.6%.
- The Fed’s Beige Book survey revealed some long-awaited upward pressure on US wages and prices from late February to early April.
- Singapore’s MAS unexpectedly eased its monetary stance, moving to a policy last adopted during the 2008 global financial crisis. The central bank moved to a neutral policy of zero-percent appreciation in the Singapore dollar, while leaving the width and centre of the policy band unchanged.
- Spot 1.3626
- Following this morning’s surprise easing by MAS, USDSGD rallied as much as 1.0% to a 2-week high of 1.3637.
- 1Q GDP expanded 1.8% year-on-year, the same pace as the previous quarter and better than the expected 1.7%. On a quarter-on-quarter seasonally adjusted annualised basis, however, GDP slowed to a halt from expanding 6.2% the previous quarter.
- The Ministry of Trade and Industry stated that the manufacturing sector contracted 2.0% year-on-year, following a 6.7% decline the previous quarter. The construction sector grew 6.2% over the same period, improving on its prior growth of 4.9%. Growth in the services sector slowed to 1.9% for the past year, easing from its previous pace of 2.8%.
- Spot 0.7641
- Australian March employment rose by 26,100, better than the expected increase of 17,000 and the previous month’s drop of 700. Unemployment rate fell to 5.7%, less than both the estimated 5.9% and the prior reading of 5.8%.
- The better-than-expected jobs report could signal that the central bank is unlikely to ease policy in the near-term. It is worth noting, however, that the bulk of employment gains came from part-time workers, which surged by 34,900. Full-time jobs, instead, decreased by 8,800.
- AUDUSD briefly dipped back to its previous session’s low of 0.7619 following the jobs data release.
- Spot 1.2854
- As expected, the Bank of Canada last night left its policy rate unchanged at 0.50%.
- USDCAD briefly eked past the previous session’s low to 1.2745, before paring declines to trade back above 1.2800, as BOC Governor Poloz commented that he might have been inclined to cut interest rates if not for the fiscal stimulus the government unveiled last month. He also added that a stronger Canadian dollar may put export growth at risk.
- Spot 6.4947
- The PBOC lowered its fixing today by 0.46%, the most since 7th Jan, to 6.4891. USDCNH climbed to a 2-week high of 6.5005.
- Commerzbank noted that MAS’ decision to adopt a zero-percent appreciation this morning could indicate that regional central banks, including the PBOC, are not willing to maintain their respective currency strengths after recent gains.
- Premier Li Keqiang commented yesterday that foundations for China’s economic improvement are not solid as global economic recovery is weak.
- Spot 8.2519
- USDNOK pared back its declines made this week, rebounding back to the 8.2500 handle, which is roughly the midpoint between the nearest resistance and support levels of 8.4465 and 8.0389 respectively.