Key overnight events:
- The S&P 500 Index failed to hold onto a 0.5% gain, and fell in the final 2 hours of trading to end 0.8% lower, bringing its fall in February to 0.4% and capping a third straight month of declines.
- China cut its required ratio for banks yesterday evening, signalling that economic growth is still the priority even if it means a weaker yuan. The latest cut takes the RRR to 17%, which is still one of the highest levels globally, leading some to believe that China is yet to be done with easing.
- Euro-area headline inflation in February fell to -0.2%, worse than the 0.0% expected, further boosting odds of further easing at next week’s ECB meeting.
- Crude oil expiring April settled at its highest level in 7 weeks, 3.0% higher at $33.75/bbl, buoyed by China’s latest easing measures and further comments by Saudi Arabia stating that they would work with other producers to stabilize oil markets.
- Spot 1.4033
- USDSGD was little changed, closing 0.16% lower at 1.4058, as it continues to be sandwiched between both the 100- and 200-day moving averages.
- National Development Minister Lawrence Wong said that it is still too early to relax property market cooling measures now and doing so could result in a market rebound.
- Spot 0.7117
- AUDUSD is currently testing the previous day’s low of 0.7109, as investors await the release of RBA’s benchmark rate. The central bank is forecasted to leave rates unchanged, as surveyed by Bloomberg.
- A surprise rate cut could result in AUDUSD trading lower and potentially testing the next strong support level – the 7-year low of 0.6828.
- Spot 1.3539
- USDCAD briefly traded below the 1.3500 handle last night, making a new 2016 low of 1.3482 as it continues its consolidation after breaking the previous support of 1.3640 last week.
- Canadian GDP numbers are due for release tonight, with most expecting zero-to-marginal fourth quarter growth.
- Spot 6.5454
- Official and Caixin February manufacturing PMI came out this morning worse than expected at 49.0 and 48.0 respectively; forecasted figures were 49.4 and 48.4.
- The RRR cut yesterday resulted in USDCNH rising to 6.5592, the highest since 10th Feb. The gains were pared today though as the PBOC this morning set its yuan reference rate 0.10% higher – its first increase in 6 days, and causing onshore yuan to strengthen the most in 3 weeks.
- Spot 8.6989
- The Norwegian krone displayed slight weakness to the US dollar, closing 0.3% weaker. Since breaking above the previous resistance at 8.6571 last week, USDNOK has comfortably held above the level. The next level above at 8.7566 is in threat of being breached.
- January retails sales excluding sales of vehicles rose 0.9%, higher than the 0.3% expected. Credit growth for January rose as well by 5.3%, more than the 5.1% forecasted.