Key overnight events:
- The Fed reassured investors by continuing to signal it will proceed gradually in raising interest rates amid slow but steady growth in the economy as signs of improvement in the labor market mount. As expected, the Fed left its benchmark rate unchanged. In addition, the FOMC omitted previous language on global economic and financial developments continuing to pose risks, instead saying it will “closely monitor” the situation.
- Odds of a Fed hike in June ticked up to 21%, from 19.6% a week ago, but down from 38% a month ago, according to Fed funds futures tracked by Bloomberg.
- The S&P 500 Index climbed for a second day, by 0.2%, led by energy stocks as crude oil climbed above $45/bbl for the first time since November. Facebook Inc. surged more than 8% in after-market trading after comfortably beating earnings estimates.
- WTI surged 2.9% to settle at $45.33/bbl, marking the first time in 19 months it has settled above its 200-day moving average. A government report showed the US crude production slipped to an 18-month low of 8.9 million bpd last week, the lowest since Oct 2014.
- The RBNZ held policy this morning, as expected, and defied a 35% market pricing for a cut; USDNZD slumped as much as 1.2% following the release.
- The BOJ held off expanding monetary policy, as Governor Kuroda and his colleagues opt to take more time to assess the impact of negative interest rates. The move comes as a slight surprise as the majority of economists surveyed by Bloomberg had expected some form of easing from the central bank. USDJPY slumped as much as 2.2%, back below the 110.
- A slew of Japanese economic data was released earlier today; Japan’s jobless rate unexpectedly fell to 3.2%, while CPI dropped more-than-expected by 0.3% from a year earlier, retail trade shrank less-than-expected by 1.1% last month and industrial production beat estimates by jumping 3.6% in March.
- Spot 1.3493
- USDSGD briefly spiked and rebounded off its 7-day high of 1.3562 last night, before sinking to its lowest this week of 1.3459 in morning trade.
- Unemployment rate for the first quarter this year came in at a seasonally-adjusted 1.9%, weaker than the 2.0% expected.
- The MAS stated while weakness in the outlook was mainly confined to the trade-related industries last year, it appears to have spread to other sectors in recent months. The central bank foresees modest economic growth this year, and expects wage growth to slow to 2.5% to 3% in 2016.
- Spot 0.7589
- After slumping 1.7% the previous day, AUDUSD sank further by as much as 0.8% last night to 0.7549.
- In a note to clients, Credit Suisse wrote that the Aussie dollar is threatened by renewed downside in iron ore, and has a 12-month target of 0.7200 for AUDUSD; China import iron-ore benchmark grade fell 2.7% to $61.09 on Wed, falling for the fourth day in succession.
- Spot 1.2593
- In reaction to fresh highs in oil prices, USDCAD fell to a fresh 9-month low of 1.2572.
- The next support level resides below at 1.2388.
- Spot 6.4997
- USDCNH continues to struggle to hold above the 6.5100 handle, even after the PBOC lowered its reference rate for the first time in three days.
- After reaching close to its 1-month high of 6.5169 earlier, USDCNH pared gains, reversing back below the 6.5000 handle after the BOJ refrained from expanding monetary stimulus.
- Spot 8.1511
- USDNOK looks poised to snap a 3-day losing streak, pausing to find some support at the 8.1200 level.