Key overnight events:
- The International Energy Agency stated on Tuesday that global oil markets could “drown in oversupply”, driving crude oil futures expiring this month to the lowest levels since Sep 2003 – crude oil futures expiring in February reached a low of $27.92/bbl early this morning, while futures expiring in March hit a low of $29.03/bbl.
- Despite relief rallies staged across Asia and Europe yesterday, equities in the US barely eked our gains. The S&P 500 erased gains from earlier in the session to close up 0.05%.
- The IMF lowered its 2016 global growth outlook to 3.4% from 3.6%.
- Spot 1.4382
- More sideways action for USDSGD as it continues to trade within its past week range of 1.4427 – 1.4309.
- The MAS released a statement on its website stating that its monetary policy decisions recognise that, while inflation is currently low, it is likely to rise in the medium term amidst a tight labour market.
- Spot 0.6873
- Yesterday’s risk-on sentiment propelled AUDUSD higher to 0.6957 last night, though it has pared gains back to below 0.6900 this morning.
- There has been increased speculation that the Reserve Bank of Australia may cut rates this year. The Sydney Morning Herald reported yesterday that the latest interest rate futures pricing from Citigroup this week indicate a 100% chance of a 25bp rate cut in June 2016, up from 50% late last year.
- Spot 1.4628
- USDCAD remained well supported at 1.4450 as fresh lows in oil prices have pushed USDCAD back up towards last week’s 1.4660 high.
- According to Bloomberg, the implied probability for a Bank of Canada rate cut tonight is currently about 51%, dropping from around 64% on Friday, as some economists feel that existing CAD weakness is already providing a similar effect to a rate cut.
- Spot 6.5976
- USDCNH is currently largely unchanged from yesterday, trading around the 6.6000 handle, despite fresh speculation of further easing by the PBOC after yesterday’s GDP numbers came in at a touch weaker.
- The PBOC this morning set its yuan reference rate at its strongest since 6th Jan at 6.5578, continuing its efforts to restrict any sharp depreciation in it currency.
- Spot 8.8198
- USDNOK pared recent gains, falling back towards Friday’s low of 8.7566.
- The currency pair have largely remained within a range of 8.8000 – 9.0000 in 2016 despite declining oil prices, highlighting the strength of the psychological resistance level at 9.000.