Key overnight events:
- March’s core CPI in the US rose 0.1% month-on-month, slower than the expected 0.2%, and 2.2% year-on-year, missing the forecasted 2.3%. Weaker than expected inflation data adds more support to Yellen’s argument for only gradual rate hikes.
- The S&P 500 Index ended virtually unchanged, as mixed corporate earning saw the index swing between gains and losses throughout the session. The US dollar strengthened marginally, as the Bloomberg Dollar Spot Index added 0.1% following its steepest one-day gain in 3 weeks. Despite the month not being half over, defaults on US high-yield bonds topped US$14 billion in April, the largest monthly volume in 2 years, according to Fitch.
- Crude oil futures expiring in May slipped 0.6% before the meeting in Doha this weekend. The International Energy Agency predicted the global surplus will almost vanish in the second half of this year.
- The Bank of England kept its policy rate unchanged yesterday at 0.5% and left asset purchases at £375 billion, in line with expectations.
- China’s economy expanded 6.7% year-on-year in the first quarter this year, in line with estimates and the government’s growth target of 6.5% to 7.0%, but slower than the previous quarter’s growth of 6.9%.
- Spot 1.3623
- USDSGD climbed to as high as 1.2% to 1.3668 yesterday on the wake of MAS’ unexpected easing, and capping its biggest 2-day drop since 2011. The currency pair has since pared gains back towards the 1.3600 handle.
- According to most analysts, MAS’ surprise easing in its monetary stance suggests concerns over growth and inflation, Bloomberg reports.
- Spot 0.7694
- Following yesterday’s positive jobs report, AUDUSD rose to a high of 0.7739, the highest since July last year.
- An ascent to 0.8000 remains on the cards, with the currency pair likely to take a pause at the 0.7850 level along the way.
- Spot 1.2817
- Canadian Trade Minister Freeland stated that Canada will sign its European Union trade pact this year and ratify it no later than early 2017.
- Following its lowest close in 9 months on Wednesday, USDCAD continues to fluctuate near its 2016-low of 1.2745 ahead of the oil meeting in Doha this weekend.
- Spot 6.4958
- Apart from reporting 1Q GDP this morning, China’s statistics bureau released a slew of other economic data as well. Industrial production in March rose 6.8% year-on-year, better than the expected 5.9%, while retail sales over the same period climbed 10.5%, beating the forecasted 10.4%.
- Fixed asset investment jumped 10.7% year-on-year in the first quarter, as property construction rebounded. Home sales soared 71% in March.
- New yuan loans tallied 1,370 billion yuan, almost doubling from the prior amount, while aggregate financing tripled to 2,340 billion yuan.
- According to the IMF, China may have 1.3 trillion yuan worth of loans extended to borrowers that do not have sufficient income to cover interest payments, with potential losses equivalent to 7% of the country’s GDP.
- USDCNH was largely unchanged following the release of today’s economic data, maintaining near the 6.5000 handle.
- Spot 8.23721
- USDNOK seems to have settled within the range of 8.3000 – 8.1500, and looks unlikely deviate from it as investors look ahead to the Doha meeting this weekend.