Key overnight events:
- As expected, the ECB left its benchmark interest rate at zero and the deposit rate at -0.40%, and maintained asset purchases at €80 billion per month yesterday. Mario Draghi said easing needs more time to work and warned that further ECB criticism could result in a delay in achieving objectives and therefore the need for more policy expansion.
- The S&P 500 Index fell 0.50%, falling below 2,100 for the first time in 3 days. Earnings from Alphabet Inc., Microsoft Corp., and Visa Inc. were released after markets closed and missed expectations.
- Crude futures expiring in June fell 2.3%, just a day after it had settled at $44.18/bbl, the highest in 4 months. Kuwait’s oil production is now running near capacity after labor strikes ceased, and US crude inventories rose to a new 85-year high last week.
- US jobless claims for last week sank to 247,000, from 253,000 the previous week, and the lowest level since 1973.
- Bank Indonesia held rates at 6.75% as expected, but issued a surprisingly upbeat statement that implies it might stay on hold for longer.
- Spot 1.3486
- USDSGD continued its rebound off 9-month lows from 2 days ago, testing the 1.3500 handle this morning.
- The medium-term downtrend for the currency pair remains intact, with the next point of support coming in at 1.3352.
- Bloomberg reports that authorities have raided a number of brokerages in a probe of possible breaches of securities law, as the government seeks to protect the nation’s reputation as a financial center. The local stock exchange said separately that it had reported several cases related to alleged insider trading and market manipulation.
- Spot 0.7746
- AUDUSD pulled back after reaching a 10-month high of 0.7835 last night, falling as much as 1.0% to 0.7737 this morning.
- Australia’s sovereign wealth fund increased the amount of cash it holds to almost one quarter, or 22.9%, of its A$117.4 billion portfolio, citing the decreased amount of firepower global central banks’ have to respond to economic weakness.
- Spot 1.2717
- Oil’s overnight pullback drove USDCAD higher by as much as 0.8% to 1.2749.
- Canadian inflation and retail sales data will be released later today. Core CPI is expected have risen 0.4% month-on-month in March, while retail sales is estimated to have dropped 0.8% over the same period.
- BOC Governor Stephen Poloz added his voice to the debate about emergency stimulus policies being set in parts of Europe and Japan, commenting that negative rates may become less effective at boosting economic growth the longer they are in place.
- Spot 6.4880
- USDCNH continued to maintain within its 2-week range of 6.4666 – 6.5005, as the PBOC lowered its reference rate for the second day in a row.
- The currency pair remains sandwiched between its 50- and 200-day moving averages at 6.5041 and 6.4600 respectively.
- George Soros commented that China’s debt-fuelled economy resembles the US in 2007-2008, before its credit market collapsed. He added that the nation’s March credit-growth figures should be viewed as a warning sign. New credit last month totalled 2.34 trillion yuan, far exceeding the median forecast of 1.4 trillion yuan.
- Spot 8.1935
- USDNOK recovered back as much as 1.1% to 8.2132 overnight, before trading back below the 8.2000 handle earlier today.