June 22, 2016

Key overnight events:

  • In a testimony to lawmakers, Fed Chair Yellen echoed the Fed’s statement on 15th June, reiterating a cautious and uncertain view of the economy and that her take is that the economy should be on a “favourable path” before the central bank considers hiking interest rates. Many analysts speculate Yellen lies in the one-hike camp for 2016.
  • The S&P 500 Index climbed 0.3%, bolstered by a third straight advance for oil and gas companies even as crude oil prices dropped. Falling biotech stocks dragged down health-care equities, while the dollar’s first climb in five sessions weighed on raw-materials companies. The Bloomberg Spot Dollar Index rose 0.3%, snapping a four-day losing streak.
  • A new poll by IG/Survation showed Brexit too close to call, erasing Asian gains for sterling. GBPUSD slipped as much as 0.9% after reaching 1.4783 – its highest level since 5th Jan. Bookmakers, however, give Leave just a 25% chance of success.
  • The ECB’s President Mario Draghi reiterated his willingness to act to bolster inflation and that a new set of targeted loans is coming. The euro weakened as much as 0.8% against the dollar on the back of the news.
  • WTI futures expiring in July settled 1.1% lower at $48.85/bbl. US crude inventories probably declined by 1.5 million barrels last week, according to a Bloomberg survey before the release of official government data tonight.

 

USDSGD:

  • Spot 1.3435
  • USDSGD bounced off the 1.3400 handle, climbing 0.2% to 1.3438 earlier. The currency pair is currently trading around 7-week lows.
  • S&P Global Ratings has revised its view of the economic risk trend in Singapore’s banking sector to stable from positive, according to a report published Tuesday.

 

AUDUSD:

  • Spot 0.7467
  • AUDUSD retreated 0.7% back towards its 50-day moving average of 0.7432 after advancing past it over the course of the past three sessions.
  • The currency pair should find support around the 0.7400 handle and maintain its uptrend momentum from the past three weeks. Beyond 0.7500, the next resistance comes in at the 100-week moving average of 0.7757.

 

USDCAD:

  • Spot 1.2789
  • USDCAD pared back previous day’s losses, gaining as much as 0.4% to 1.2827 last night.
  • Barring any large movements in crude oil prices, the currency pair looks set to remain range bound for the medium term, within the range of 1.2500 and 1.3150.

 

USDCNH:

  • Spot 6.5941
  • The PBOC weakened yuan fixing by 0.4%, the most this month, to 6.5935. USDCNH rose 0.1% to 6.5991 earlier today.
  • According to Bloomberg Intelligence Economics, China’s default database shows 23 reported cases so far in 2016, up from 17 in 1H 2015, with the latest wave of defaults being concentrated in the corporate bond market. State-owned firms in the metals industry are especially affected.
  • Premier Li Keqiang said the banking industry is stable and banks should support the economy, China Central Television reported, spurring speculation of a RRR cut in the near future.

 

USDNOK:

  • Spot 8.2986
  • USDNOK advanced as much as 0.8% to 8.3355 due to weaker oil prices overnight.
  • The Norges Bank is expected to keep deposit rates unchanged tomorrow at 0.50%.
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