Key overnight events:
- US durable goods orders in March rose 0.8%, improving from the previous month’s 3.0%-drop but missing estimates of a 1.9%-gain. Consumer confidence missed analysts’ expectations as well, coming in at 94.2 instead of the 95.8 predicted.
- Markets were largely subdued on the eve of the Fed’s and BOJ’s policy decisions which are due out tomorrow. The S&P 500 Index edged 0.2% higher on light volume, buoyed by energy stocks which were driven by crude oil’s overnight advance. Apple Inc. reported its first quarterly revenue drop in more than a decade and forecast another; Apple shares slumped 8% in afterhours trading.
- Crude oil futures expiring in June settled 3.3% higher at $44.04/bbl, edging above its 200-day moving average for the first time since Sep 2014. Global markets remain oversupplied, as US crude stockpiles probably expanded by 1.5 million barrels last week according to a Bloomberg survey. However some feel the surplus is gradually diminishing, as echoed by BP’s CEO Bob Dudley who predicted the market may rebalance by the year’s end.
- The US dollar weakened broadly for the second day, as it continues to trade around its weakest levels in 10 months as economists see a close-to-zero chance of the Fed raising rates tomorrow.
- Spot 1.3506
- Industrial production in March fell 0.5%, beating the estimated 2.0%-drop by economists and slowing from a 4.7%-drop in February.
- USDSGD bears reclaimed the 1.3500 handle earlier this morning as the currency pair slid 0.4% lower to as much as 1.3478.
- The downward trend since mid-January this year remains intact, despite MAS’s surprise easing 2 weeks ago.
- Spot 0.7637
- Core inflation slowed and first quarter CPI unexpectedly fell as a rebounding currency cut import prices. 1Q CPI slipped 0.2% quarter-on-quarter; a 0.2%-gain was expected while the prior reading was an increase of 0.4%. In year-on-year terms, prices rose 1.3%, slower than the 1.7% estimated.
- AUDUSD plunged back below the 0.7700 level, by as much as 1.3% to 0.7635, following the data release. Analysts expect that a further fall in inflation would increase the chances of RBA cutting interest rates again sometime this year.
- Spot 1.2608
- USDCAD dropped to its 9-month low of 1.2593 as the key Fed policy statement loomed a day away and crude oil prices neared multi-month highs.
- A break below the current low would result in the currency pair testing the next support level at 1.2388.
- Governor Poloz said negative rates may have minimal impact on growth and are even disliked by policy makers pressed into using them, however they are still an option if the economy needs a jolt.
- Spot 6.5026
- Industrial profits in March jumped 11.1% year-on-year, up from a 4.7%-drop a month ago and the most since Jul 2014.
- USDCNH remains steady and continues to be supported around the 6.5000 handle, rebounding off the low of 6.4973 twice in two days.
- According to the IMF, China’s plan to rid banks of bad loans could backfire, allowing debt-laden “zombie” companies to stay afloat and creating conflicts of interest for bankers.
- Spot 8.1675
- Fuelled by oil’s gains overnight, the Norwegian krone strengthened by as much as 0.8% against the US dollar.
- USDNOK continues to near almost 9-month-lows of 8.0389.