April 19, 2016

Key overnight events:

  • After slumping 6.8% to a low of $37.61/bbl yesterday morning, crude oil futures expiring in May rebounded back to $40/bbl and recovered most of its earlier losses. The rebound was fuelled by a cut in crude production in Kuwait by 60% to 1.1 million barrels/day, as the nation’s union of oil workers staged a strike.
  • The S&P 500 Index rose 0.7% to close at its highest since 2nd Dec last year, led by energy producers and improved outlook and corporate earnings by Pepsico, Hasbro and Walt Disney. Morgan Stanley’s 1Q revenue from fixed income trading fell 54% year-on-year, while that in equities slid 9.3%; net income, however, managed to beat analysts’ expectations.
  • Commodity currencies like the Aussie, loonie and Norwegian krone snapped back in the green against the US dollar; while the yen’s gains evaporated as USDJPY rose back above 109. The euro climbed 0.3%, the most in 3 weeks, amid speculation that the ECB will maintain its monetary policy when it meets this week.
  • New York Fed President William Dudley said that policy changes are likely to be gradual and cautious, given that uncertainties have not fully abated. His colleague, the Fed’s Boston President Eric Rosengren, said this morning that the market’s outlook for interest rates is too dovish, and that the Fed will be raising rates faster than what is reflected in financial markets.
  • The Bank of Korea this morning held its key interest rate at 1.5%, unchanged at a record low for the 10th consecutive month, as expected.

 

USDSGD:

  • Spot 1.3493
  • USDSGD slid by as much as 0.6% to a low of 1.3479 this morning, erasing of all the currency pair’s gains that followed after MAS’s surprise easing last week.

 

AUDUSD:

  • Spot 0.7769
  • AUDUSD rallied as much as 0.8% to 0.7784, the highest in more than 9 months. The next level at 0.7850 looks to provide some short-term resistance.
  • In the RBA’s minutes that were released earlier today, the central bank stated that “very accommodative” policy is appropriate given low inflation and reaffirmed the currency’s strength could complicate the economy’s rebalancing away from mining.

 

USDCAD:

  • Spot 1.2774
  • Following oil’s rebound overnight, USDCAD slid 1.1% to a session-low of 1.2760, just a day after testing the 1.3000 level.
  • A break below 2016’s low of 1.2745, and the currency pair could potentially reach the region of 1.2410 – 1.2500.

 

USDCNH:

  • Spot 6.4824
  • Onshore yuan was little changed as the PBOC raised its reference rate again; offshore yuan strengthened for a third day, as USDCNH slid 0.1% to a low of 6.4801 this morning.
  • IMF deputy managing director Zhu Min said China should not swap bad debt for equity to avoid passing on risks to the financial system; instead, market-oriented ways like debt and bankruptcy restructuring for deleveraging should be used.

 

USDNOK:

  • Spot 8.2078
  • USDNOK reversed gains from the previous day, bouncing off intraday highs of 8.3196 to retreat back to 8.2000 levels, following Brent crude’s sharp overnight reversal.

 

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