Key overnight events:
- US 1Q GDP expanded 0.5% quarter-on-quarter, less than the 0.7% growth expected and slowing from the prior expansion of 1.4%. Weaker business investment and consumer spending were the main drags.
- The S&P 500 Index sank 0.9%, its biggest one-day slide since 7th Apr, weighed by Apple’s 3.1% slide and fragile investor sentiment post-BOJ. The US dollar sold off broadly, as the Bloomberg Dollar Spot Index plunged to levels last seen since Jun 2015; the index has fallen more than 20% since mid-January.
- Front-month WTI futures climbed 1.5% higher to settle at $46.03/bbl, buoyed by a weaker US dollar and data that showed US production fell for a seventh week to the lowest level since Oct 2014. Interfax news agency reported that Russia may take part in OPEC’s June meeting.
- USDJPY’s plunge shows no sign of abating; after sinking 2.9% yesterday, it fell further by as much as 0.9% this morning to 107.08, the lowest since Oct 2014. Japanese stock markets are closed as Golden Week starts today.
- German unemployment in April dropped by 16,000, better than the expectation of an unchanged figure. However, inflation data continues to be muted, as CPI fell 0.2% month-on-month and crept up 0.1% year-on-year.
- China’s ICBC avoided reporting a quarterly loss by letting bad-loan provisions fall to 141% of existing non-performing credit, below the regulatory requirement of 150%, thus allowing it to eke out a 0.6% gain in net income in the first quarter. The breaches by ICBC and, earlier this week, Bank of China, highlight signs of growing stress in the nation’s banking industry.
- Spot 1.3441
- USDSGD extended its week’s declines by as much as 0.3% this morning, although it continues to hold above the 1.3400 handle.
- Bank loans and advances in March fell 1.7% year-on-year, while credit card bad debts totalled S$29.6 million, up from S$26.6 million the previous month.
- Spot 0.7648
- AUDUSD, buoyed by US dollar weakness overnight, pared its week’s declines back above 0.7600.
- 1Q producer prices fell 0.2% quarter-on-quarter, but rose 1.2% from a year earlier.
- Weak inflation data this week has opened the door for another rate cut and makes next week’s RBA meeting “live”, NAB wrote in a note to clients today.
- Spot 1.2524
- USDCAD made fresh 10-month lows last night, sinking to 1.2515; dollar weakness and oil’s resurgence have underpinned the loonie’s strength against the US dollar since mid-January.
- Canadian GDP in February is expected to have contracted 0.2% month-on-month and expanded 1.5% year-on-year; data will be released tonight.
- Spot 6.4829
- The PBOC responded to an overnight tumble in the dollar by strengthening its currency fixing by the most since Jul 2005. The reference rate was raised by 0.6% to 6.4589 per dollar.
- USDCNH fell 0.2% to 6.4753 today, extending to its 0.3% decline the previous session.
- Chinese authorities are considering moving forward its finance reform meeting, which is scheduled for 2017, to this year in order to map out sweeping consolidation of the country’s financial regulatory system in a bid to reduce risks, Bloomberg reported.
- Spot 8.1182
- USDNOK continues to find support above the 8.1000 level, even as US dollar weakness and supportive oil prices continue to add downward pressure on the currency pair.
- Norway’s US$870 billion sovereign wealth fund, the world’s biggest, lost US$10 billion or 0.6% in the first quarter this year. It recorded 2.9%- and 1.3%-losses in its stock and real-estate portfolios, while its bonds gained 3.3%. Government withdrawals totaled US$2.6 billion.