Key overnight events:
- The S&P 500 index overcame a decline of as much as 1.6% during last night’s session, before finally paring losses and closing 0.4% higher, as crude oil prices steadied around $32/bbl; trading volume rose for the first time in a week.
- Crude oil futures expiring in April battled back from as much as a 4.1% decline to $30.56/bbl to close 0.9% higher at $32.15/bbl after gasoline demand levels rose to 9.6 million bbl/day, the highest for that week in data going back 30 years. However, US crude stockpiles increased for a second week to 507.6 million bbl, the most since 1930, according to EIA data.
- US Markit Services PMI unexpectedly shrank in February to 49.8 from 53.2 in January, an increased reading to 53.5 was expected. The contraction was the first time in more than 2 years.
- US Treasury Secretary Jacob Lew warned against expecting a “crisis response in a non-crisis environment” at the G-20 meeting scheduled to begin tomorrow, despite the IMF urging the group to take bold action.
- Spot 1.4030
- USDSGD reached a high of 1.4110 last night, before paring gains back towards the 1.4000 handle this morning.
- USDSGD is currently sandwiched between the 100- and 200-day moving averages of 1.4119 and 1.3962 respectively.
- Bank of Singapore’s FX strategists expect USDSGD to rise to 1.5000 by the year’s end, citing possible further weakness in the yuan as a driving factor.
- Spot 0.7171
- 4Q private capital expenditure rose by 0.8% quarter-on-quarter, better than the 3.0% decline expected. However, planned private capex for 2016/17 came in less than expected, triggering a decline in AUDUSD.
- AUDUSD reached an intraday high of 0.7213 late last night, before retreating back below the 0.7200 handle today on the wake of weaker-than-expected planned capex expenditure.
- Spot 1.3728
- The 100-day moving average of 1.3643 continues to be tested again, as USDCAD retreated from its high of 1.3859 to a low of 1.3678 following oil’s overnight recovery.
- Spot 6.5380
- USDCNH remains little changed ahead of the G-20 summit set to begin tomorrow in Shanghai, as Finance Minister Lou reportedly stated that yuan devaluation is not on the meeting’s agenda.
- PBOC officials have recommended raising China’s budget deficit to at least 4% of GDP in order to offset falling revenue caused by tax cuts. China’s fiscal deficit in 2015 is 2.3% of GDP.
- China has taken a major step towards giving foreigners free access to its bond market, after stating yesterday that most types of overseas financial institutions will no longer require quotas to invest in the interbank bond market, which accounts for the bulk of debt in China.
- Spot 8.6652
- Norway’s December unemployment rate came in at 4.5%, lower than the 4.6% estimated.
- Bloomberg reported that oil and gas companies operating in Norway have increased planned spending cuts for the year to 14%, thus adding pressure for Norges Bank to cut rates in March.
- As a result, USDNOK soared to 8.7608 last night, the highest in a month, as it was also spurred on by oil’s initial price decline. It has since pared gains back to the previous-resistance-turned-support of 8.6571.