Key overnight events:
- The S&P 500 Index slipped 0.2% on Friday, but still ended higher for the second week in a row. The US dollar strengthened broadly, fuelled by increased prospects of a Fed rate hike as US economic data topped forecasts.
- The Fed’s preferred inflation gauge, the price index for personal consumption expenditures, rose by 1.4% year-on-year, the most since Oct 2014; a 1.1% increase was expected. Core inflation is now higher than the Fed forecast it to be by the end of 2016.
- US GDP grew at an annualized pace of 1% quarter-on-quarter, higher than the 0.4% expected. Other data that also beat expectations were personal income and personal spending in January, as well as the University of Michigan consumer sentiment.
- Crude oil front month futures reached a high of $34.69/bbl on Friday, the highest in 3 weeks, before paring gains back to close below $33/bbl.
- The G-20 summit in Shanghai concluded over the weekend without any coordinated stimulus plan, which some investors were hoping for. Their communique stated that “monetary policy alone cannot lead to balanced growth” and officials reaffirmed that they will refrain from competitive devaluations of currencies.
- Spot 1.4099
- USDSGD climbed to a high of 1.4119 this morning, its highest since 4th Feb. The 100-day moving average at 1.4121 is proving to be a tough resistance to break.
- According to the latest data from the nation’s statistics department, 7,120 firms stopped operations in Dec 2015, compared with 4,757 firms being formed; business cessation surpassed formation by the largest margin in 10 years.
- Industrial production came in last Friday at -0.5% year-on-year, better than the -5.1% expected. However, the prior month’s figure was revised lower to -11.9% from -7.9%.
- Spot 0.7126
- AUDUSD has struggled to break its 200-day moving average of 0.7259, and has declined back below the 0.7200 handle.
- The RBA is expected to leave its benchmark rate unchanged tomorrow, according to 27 economists surveyed by Bloomberg.
- Spot 1.3529
- USDCAD has continued to trade at its 2016 lows since breaking a key support level last Thursday.
- The 200-day moving average of 1.3275 below forms the next level of support.
- GDP for Dec 2105 is scheduled to come in tomorrow night at a slight increase of 0.1% month-on-month, while the quarterly annualized GDP for 4Q 2015 is expected to come in at 0.0%.
- Spot 6.5500
- The PBOC lowered its reference rate this morning by the most since 7th Jan. As a result, USDCNH traded at its highest level since 10th Feb.
- This comes just after the IMF’s Christine Lagarde saying that China has no intention to devalue its currency during this past weekend’s G-20 summit. Her comments were also echoed by US Treasury Secretary Jacob Lew as he said that China does not intend to use its currency to boost exports.
- Spot 8.6798
- The Norwegian krone continues its recent weakness to the US dollar, as USDNOK bounced of the 8.6000 handle on the wake of broad US dollar strength last Friday.
- Norway’s unemployment rate came in in line with expectations at 3.3%. Manufacturing PMI is due to be reported tomorrow with a forecasted reading of 48.0; prior month’s figure was 49.2.