Key overnight events:
- The selloff in in Asia yesterday continued in European and US markets, as most indices ended sessions well into the red, although US indices staged a second half rally to pare losses. The S&P 500 closed down 1.2%, its lowest close in 21 months, and had traded down to as much as 3.7% lower before midday.
- December inflation in the US came in at -0.1% month-on-month, worse than the 0.0% expected, while year-on-year inflation was +0.7%, also lower than the +0.8% forecasted.
- Crude oil futures for delivery in February expired yesterday to settle at $26.65/bbl, and reached an intraday low of $26.19/bbl. The more actively traded March-contracted futures traded to a low of $27.56/bbl last night, but has since rebounded back above the $28.50/bbl level.
- Spot 1.4389
- A triangle pattern has formed around the 1.4350 – 1.4400 region.
- A break out of this range will be key in terms of the next medium-term direction for the USDSGD.
- Spot 0.6910
- Last Friday’s low of 0.6827 continues to remain strongly bid as the AUDUSD bounced strongly off it a couple of times over the past few days.
- More consolidation looks set to take place around the 0.6900 handle.
- Spot 1.4484
- The BoC held its benchmark interest rate unchanged at 0.5% last night, and stated that stronger US demand, a weaker Canadian dollar and last year’s rate cuts are currently leading the economy out of an oil slump.
- USDCAD retreated from last night’s high of 1.4690, which was reached prior to the BoC’s rate announcement, to a low of 1.4450 this morning.
- Spot 6.6089
- According to Bloomberg reports, the PBOC today injected 400 billion yuan via open-market operations, its biggest open-market cash injection in 3 years.
- PBOC’s chief economist, Ma Jun, followed up by stating that the overuse of reserve ratio cuts puts too much downward pressure on short term interest rates, and is bad for stabilizing capital outflows.
- The USDCNH, after a volatile start to the year, seems to be undergoing a period of consolidation over the past couple of days between the 6.5800 – 6.6200 range.
- Spot 8.8847
- Spurred by new lows in crude oil prices overnight, USDNOK rebounded off 8.8000 levels and traded back up to as high as 8.9233, its highest in 5 days.