Key overnight events:
- The S&P 500 index rose 1.1%, on the weakest trading volume this year, to levels last seen at the start of the year, amid speculation that anxiety in global markets is abating after yesterday’s 6-7% rout in China failed to spread.
- Front month crude oil futures rallied almost 3% to an overnight high of $33.49/bbl, as Venezuelan Oil Minister Eulogio Del Pino stated that Russia, Saudi Arabia, Qatar and Venezuela are discussing a March meeting location and are planning to meet in July as well.
- US durable goods orders climbed 4.9% month-on-month in January from -4.6% in December, the fastest pace of increase in 10 years and beating the expected increase of 2.9%.
- The Fed’s Bullard commented that fallen inflation expectations has got him worried; he also dismissed Brexit as a threat to the US economy.
- Atlanta Fed President Lockhart said that rising rates will create challenges for banks and could hurt the sector; he added that officials are monitoring the situation.
- Spot 1.3997
- USDSGD declined to a low of 1.3988 this morning as it continues to trade within the range it’s been predominantly in over the past week.
- A key test is whether the USDSGD can break below the 2016 low of 1.3861, which would signal a possible trend reversal.
- Industrial production is expected to come in later at a year-on-year decline of 5.1%, following a 7.9% decline in December. This would be the 12th consecutive month of negative output.
- Spot 0.7239
- AUDUSD continues to test the 200-day moving average of 0.7264, reaching a high of 0.7257 this morning.
- Australian 4Q GDP, due for release on 2nd March, is expected to come in at +0.5% quarter-on-quarter and +2.6% year-on-year.
- RBA is seen to leave rates unchanged at its 1st March meeting next week, as signalled by all 27 economists surveyed by Bloomberg.
- Spot 1.3535
- Spurred on by oil’s rally, USDCAD broke below a key support of 1.3640 and the 100-day moving average of 1.3649, reaching an overnight low of 1.3517 in the process.
- The next support below comes in the form of the 200-day moving average of 1.3269.
- Spot 6.5375
- USDCNH remained steady, and continues to be supported at the 6.5314 level.
- PBOC governor Zhou stated that China will not weaken its currency to boost sagging exports; he added that PBOC is taking a currency basket for reference instead of pegging the yuan to the basket.
- In a note to clients, Goldman Sachs analysts suggests that the recent rebound in the yuan provides an opportunity to re-establish short yuan positions against the US dollar, especially after the conclusion of G-20 meetings in Shanghai; their 12-month forecast for USDCNY is 7.000.
- Spot 8.6024
- After soaring to a high of 8.7608 the previous session, USDNOK pared all of its gains last night, reaching a low of 8.6010 this morning.
- A break below the key support of 8.4465 could signal a reversal in its current long-term uptrend.