Key overnight events:
- US stocks ended little changed after fluctuating throughout the day, as the S&P500 Index closed down 0.1% while the Dow Jones Industrial Average closed 0.1% higher.
- Investors await key central bank meetings this week, with the Bank of Japan announcing monetary policy today, and the Fed’s turn tomorrow night. The BOJ is seen on hold, with just 5 out of 40 economists surveyed by Bloomberg expecting further easing. News reports from Nikkei said that the central bank will cut economic assessment on exports, especially in China and other emerging markets, while the current assessment is for a moderate economic recovery.
- As investors await indications from the Fed of future trajectory of interest rates, traders are pricing in little chance of a hike this week, whereas the odds for one in June has now been raised to 50%, from less than 2% a month ago.
- Crude oil front month futures slid 3.4% to $37.18/bbl as markets digested Iran’s weekend rejection of any immediate output freeze. Meanwhile, OPEC continues to search for an agreement, with delegates expected to meet in April.
- Russian President Putin ordered a surprise partial withdrawal of military forces in Syria, as the Kremlin continues to pressure its ally Bashar Al-Assad to strike a deal in ending 5 years of war.
- Egypt, which is grappling with a dollar shortage, has devalued its currency, the Egyptian pound, by about 13% at a local dollar sale on Monday. Egyptian stocks advanced for the eighth day, extending its longest rally since December.
- Spot 1.3778
- The Singapore dollar weakened since yesterday with the USDSGD pair rising back towards the 1.3800 handle this morning.
- Morgan Stanley, in a note to clients, recommended a long of USDSGD at 1.3805, with a target and stop-loss of 1.4600 and 1.3715 respectively; no time frame was given. According to the note, traders may look to position SGD shorts before MAS’ meeting in April, in light of recent downward revisions in inflation forecasts and continued weakness in trade data.
- Retail sales in January is forecasted to have risen 3.1% year-on-year, up from the prior month’s increase of 2.9%.
- Spot 0.7488
- According to minutes of RBA’s 1st Mar meeting, the central bank reiterated that continued low inflation would provide scope to ease policy further, should that be appropriate in supporting demand.
- Bouncing off the resistance level of 0.7594 yesterday, AUDUSD resumed its retracement today, pulling back to as low as 0.7479. To the downside, 0.7385 looks likely to provide near term support.
- Spot 1.3294
- USDCAD, partly due to oil’s overnight pullback, continues to test the 200-day moving average of 1.3325 after reaching a 4-month low of 1.3168 last Friday.
- Spot 6.5006
- The PBOC has drafted rules for a Tobin tax on currency trading, Bloomberg reported earlier today. The news report further stated that the rules are aimed at curbing speculative trading, and is not designed to disrupt hedging and other FX transactions undertaken by companies.
- USDCNH has retraced back to the 6.5000 level after making a new 2016 low of 6.4719 last Friday.
- Spot 8.4760
- USDBOK looks to consolidate between its 200-day moving average of 8.4143 and the 8.5000 handle, as investors look ahead to FOMC’s rate decision due tomorrow night and Norges Bank’s policy decision scheduled for Thursday.