Key overnight events:
- Crude oil futures expiring in April rose by as much as 6.6%, to a high of $33.84/bbl, before closing the session at 5.2% higher at $33.39/bbl. The rally in oil prices stemmed from bets that supply will stabilize as OPEC’s El-Badri said that Iran and Iraq are still weighing an output freeze.
- In an oil market report, the International Energy Agency said that the current oil glut will persist into 2017, limiting any chance of rebound in the short term as the surplus takes even longer to clear than previously estimated.
- The S&P 500 closed higher by 1.5% on the back of oil’s rally, despite equity trading volume being the lightest in 7 weeks.
- G-20 talks are set to commence in Shanghai later this week. Means to strengthen the global financial safety net, with a focus on emerging markets and FX reserves, will be discussed, Bloomberg reports.
- Spot 1.4013
- USDSGD reached a low last night of 1.3983, before recovering back above the 1.4000 this morning.
- The 200-day moving average of 1.3955 is likely to be tested soon.
- Consumer prices fell for a 15th straight month, the longest streak of declines since 1977. CPI fell 0.6%, in line with estimates, while core CPI rose by 0.4%, lower than the 0.5% increase forecasted.
- Final 4Q GDP is set to come in tomorrow morning and is forecasted to expand by 1.8% year-on-year, down from the prior figure of 2.0%.
- Spot 0.7231
- AUDUSD hit a high of 0.7247 last night, its highest since 4th Jan, and is currently within 1% of its 200-day moving average, which it last traded above in Sep 2014.
- In addition, the Feb 2016 high of 0.7243 represents a level of resistance which might prove resilient, at least for the short term.
- Spot 1.3717
- USDCAD continues to be supported strongly by its year-to-date low and 100-day moving average of 1.3640 and 1.3628 respectively.
- Finance Minister Morneau estimated fiscal deficit for 2015-2016, which ends in March, to come in at about C$2.3 billion. The government forecast for 2016 GDP was lowered to 1.4%, from 2.0% in November last year.
- Spot 6.5333
- USDCNH rose to a high of 6.5379 after the PBOC lowered its daily reference rate this morning by 0.17%, the most in six weeks.
- The currency pair is presently trading just below its 1-week high of 6.5384.
- China will focus on boosting quality of growth in its 5-year plan and is set to continue implementing proactive fiscal and prudent monetary policies, Xinhua reported, citing official government statements.
- Spot 8.6088
- Despite the rally in oil and other commodities last night, the Norwegian krone weakened against the dollar as USDNOK recovered above the 8.6000 handle; the currency pair continues to trade around its 100-day moving average of 8.6118.