Key Clips

Key overnight events:

  • The S&P 500 Index inched up, closing 0.1% higher and eking out its longest run of daily gains in 5 months amid speculation Chinese stimulus efforts will boost demand for natural resources.
  • Iron ore jumped 19%, the most in 6 years, on talk of Chinese stimulus at the weekend National People’s Congress meeting, and on short covering.
  • Brent oil broke above $40/bbl for the first time this year as Russia floated dates to discuss a freeze. Russian Energy Minister Novak said on state television that a meeting among major oil producers may be held in Russia, Doha or Vienna sometime between 20th Mar to 1st Apr. Meanwhile, WTI futures for April delivery reached a high of $38.11/bbl before closing 5.5% higher at $37.90/bbl.
  • The Fed’s Fischer commented that we may be seeing first signs of higher inflation, while the usually-dovish Brainard stressed that downside risks remain and caution is required for further policy tightening.
  • Japan 3Q GDP shrank at an annualized rate of 1.1%, beating estimates of a 1.5% contraction. The figure represented the second contraction in 3 quarters. Corporate investment grew 1.5% quarter-on-quarter, while consumer spending fell 0.9%.

 

USDSGD:

  • Spot 1.3845
  • After reaching a key support the previous day, USDSGD has rebounded as much as 0.8% this morning to an intraday high of 1.3849.
  • FX reserves fell 0.35% from US$244.86 billion a month ago, MAS said on its website.

 

AUDUSD:

  • Spot 0.7428
  • RBA Deputy Governor Philip Lowe reiterated that low wage growth and contained inflation provide scope for further rate cuts. He added that, like most of his global peers, he prefers a weaker currency.
  • After reaching a high last night of 0.7485, the highest since July last year, AUDUSD has pared back some of its gains as it gravitates back towards the 0.7400 handle.
  • Australia’s chief export, iron ore, has rallied 28% so far in March, spurring a similar surge in the Australian dollar, which has gained as much as 5% month-to-date.

 

USDCAD:

  • Spot 1.3329
  • Oil’s recent recovery has spurred the strengthening of the Canadian dollar, as USDCAD sank last night to a 3-month-low of 1.3262, breaking the 200-day moving average briefly in the process.
  • The Bank of Canada is expected to hold rates unchanged tomorrow night, with implied futures currently pricing in a 10.8% chance of a rate cut. The Canadian dollar has outperformed developed-country currencies since the last BoC meeting on 20th Jan; at that time, Poloz said he was reluctant to provide more stimulus partly due to accommodation from weak currency. USDCAD has dropped almost 10% since then.

 

USDCNH:

  • Spot 6.5122
  • China’s FX reserves recorded a less-than-expected drop to US$3.20 trillion, higher than the US$3.19 trillion estimated, suggesting fears about cascading outflows from the second-largest economy may be overdone.
  • China’s export slump deepened in February. Exports sank by 25.4% year-on-year in US terms, worse than the -14.5% expected and the -11.2% recorded in January. Imports fell as well, by 13.8% in US terms, over the same period, missing estimates of -12.0%. The result was a trade surplus of US$32.5 billion in February, down from US$63.3 billion in January.
  • USDCNH continues to be supported at the 6.5000 handle, even after the PBOC raised its reference rate to the highest since 4th Jan.

 

USDNOK:

  • Spot 8.5011
  • Industrial production came in unchanged month-on-month while manufacturing production declined by 1.0% over the same period.
  • USDNOK remains well-supported above the 8.4000 – 8.4500 region.

 

© Jachin Capital Pte Ltd

UEN: 201419754M

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