Key overnight events:
- The Fed’s St Louis President James Bullard last night echoed comments made by his colleagues Lockhart and Williams earlier this week, stating that an April rate hike may be justified should another strong payrolls report be released.
- The hawkish Fed comments made this week has resulted in broad USD strength, with the Bloomberg Dollar Spot Index rising by as much as 1.6% in the past 5 sessions, adding downward pressures on commodities and commodity-linked currencies.
- WTI futures expiring in May fell 4% overnight to settle at $39.79/bbl, weighed down by a surge in weekly US crude inventories that was 3 times bigger than forecast.
- The S&P 500 Index slipped 0.6%, as energy and mining stocks led decliners.
- Spot 1.3697
- Core inflation for February was reported at 0.5% year-on-year, higher than the 0.3%-gain expected and the 0.4%-rise in January.
- Industrial production in February, due for reporting later today, is expected to fall 1.5% year-on-year.
- The Singapore dollar extended its gains for the week as USDSGD reached a high of 1.3712 earlier today, as investors look ahead to the announcement of Singapore’s budget for the upcoming fiscal year later today.
- Spot 0.7495
- AUDUSD declined as much as 1.33% today to a low of 0.7489 this morning, driven by broad pullbacks in commodities overnight.
- The next key support below lies at 0.7382.
- Spot 1.3229
- Driven by crude oil’s 4% slump overnight, USDCAD rebounded strongly off 1.3000, reaching a high of 1.3244 today.
- Any sustained trading above 1.3200 and the current mini pullback could extend back towards the next resistance level of 1.3457, and potentially disrupt the medium-term down trend that has been ongoing since January this year. A drop back below the 1.3000 handle and the next key support level of 1.2832 should be tested.
- Spot 6.5163
- USDCNH dropped to a 1-week low after the PBOC weakened its daily fixing by the most since 7th Jan.
- PIMCO said that it sees further depreciation to the currency, in a report issued Wednesday, adding that it expects the yuan to depreciate 7% against the dollar over the next year.
- USDCNH rose to a high this morning of 6.5168, marking a 0.8% rise for the week so far.
- In a speech earlier today, Premier Li reiterated that China won’t devalue the yuan to boost exports.
- Spot 8.4889
- USDNOK traded above the 8.4465 level and the 200-day moving average of 8.4383, as oil’s overnight slump spurred Norwegian krone weakness against the US dollar.
- Renewed oil weakness could drive the currency pair higher to the next resistance around the 8.6000 handle.