Key overnight events:
- Housing starts in the US for March dropped 8.8% month-on-month, reversing from a 6.9% gain the previous month and coming in worse than the 1.1%-drop expected. Building permits slumped 7.7% over the same period, worse than both the previous and expected figure of -2.2% and 2.0% respectively.
- Disappointing housing starts have tempered the odds of Fed hikes, causing the US dollar to slide broadly. The Bloomberg Dollar Spot Index slid 0.6%, the most in 3 weeks.
- The weaker greenback has helped lift WTI crude, with front-month futures settling 3.3% higher. Gains were pared, though, earlier this morning as Kuwait oil workers ended their labour striker. WTI futures slipped 2.2% back towards the $40/bbl handle.
- The S&P 500 Index rose 0.3%, to close above 2,100 for the first time since last November, and is just 1.6% away from hitting its all-time high reached in May last year.
- Japan’s trade surplus grew in March as imports and exports both fell 14.9% and 6.8% from the previous month; both fell lesser than expected.
- Spot 1.3403
- USDSGD continued its unexpected slide, as the currency pair declined to a low of 1.3352 last night, the lowest since June last year. Some losses have been recovered since, with the currency pair trading back at the 1.3400 level.
- The Singapore dollar has strengthened by as much as 2% against the US dollar over the past 3 days.
- Spot 0.7785
- AUDUSD made fresh 2016-highs, climbing to a high of 0.7826 last night. The currency pair has given up gains since, trading back below the 0.7800 handle.
- RBA Governor Stevens, in response to questions about why the RBA has backed off from efforts to weaken the Australian dollar, said that his language about the currency shifts with the markets and countries should focus on boosting domestic demand rather than rely on exchange rates.
- Spot 1.2711
- Driven by oil’s overnight gains, USDCAD made fresh lows, sinking to 1.2631 – the lowest in 9 months.
- Bank of Canada Governor Poloz commented that the inflation target is a “live issue” right now for policy makers and that the Canadian economic outlook does not require use of unconventional monetary policy tools. He added that Canada’s financial markets would function normally with interest rates as low as -0.50%.
- Spot 6.4716
- The PBOC raised its yuan fixing to the strongest level since 15th Dec last year amid US dollar weakness. USDCNH declined to 6.4675, near 2-week lows.
- The 200-day moving average of 6.4573 should provide some decent support in the near term; the last time the currency pair traded at the 200dma was just before last year’s shock devaluation in August.
- Goldman Sachs raised GDP forecast for China to 6.6% from 6.4%, with the expectation that policy support will be less aggressive.
- Chinese companies now take a record 192 days to collect payment for their goods or services from when the pay for the inputs, according to data compiled by Bloomberg. The cash conversion ratio is up from 125 days 5 years ago.
- Spot 8.1336
- USDNOK fell to 8.0979, the lowest in 6 months, capping a 1.9%-decline over the last 3 sessions.
- With a strong region of resistance nearing around 8.0000 – 8.0500, any further downside over the near term is expected to be limited.