Key overnight events:

  • The key focus last night was Janet Yellen’s speech before the World Affairs Council of Philadelphia. Highlights of her speech:
    • US economy continues to demonstrate forward momentum with positive forces supporting labor growth and higher inflation eventually
    • Risks in the current environment include sluggish growth globally; low inflation; Brexit and Chinese economic growth that will impact global growth prospects and commodity prices.
    • Confirmation that the fed funds rate will need to rise gradually over time but the possibility of a hike in June or July 2016 was played down.
  • Near term (next 2 weeks), expect financial markets to be in risk on mood with a lower USD (key support for DXY at 94.00; now DXY at 93.965). Commodities, emerging markets and equities should continue to move higher.
  • The S&P500 closed last night 0.49% higher from the previous close at 2,109.41, a 7 months high.
  • July 2016 crude oil futures contract traded last night near its highest close in 10 months driven by expectations that inventories probably fell by 3 million barrels last week. In addition, chairman of the Abu Dhabi Department of Economic Development Al Mansoori commented that the global oil surplus is shrinking faster than expected and has the potential to send crude prices to as high as $60/bbl this year.



  • Spot 1.3561
  • USDSGD reversed Monday’s gains, falling as much as 0.5% to 1.3539 earlier today.
  • Support over the near term lies at 1.3350m; beyond that, the next level resides at 1.3160.



  • Spot 0.7434
  • The RBA this morning stood pat on its benchmark rate at 1.75%, as expected, but failed to provide policy guidance and thus spurring bets that May’s easing could be the last for some time. AUDUSD jumped 1.2% to a one month-high of 0.7438.



  • Spot 1.2805
  • Following the overnight rally of crude oil, USDCAD slid 1.2% to a three week-low of 1.2801, taking out its 50-day moving average in the process.
  • Should the next support at 1.2772 fail to hold, a slide back to 1.2500 for the currency pair would be foreseeable.



  • Spot 6.5732
  • The PBOC weakened its fixing by 0.18% earlier today. USDCNH rose by as much as 0.1% to 6.5782.
  • Data due Wednesday, is expected to show exports declined 4% in May, the most in three months, according to Bloomberg’s survey of analysts.



  • Spot 8.1484
  • USDNOK fell 0.9% to 8.1417, erasing previous day’s gains.
  • Industrial production for April is due for release later today and is expected to have fell 1.3% from a month earlier.



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UEN: 201419754M

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