Key overnight events:
- Global monetary policy has once again been thrown into the spotlight amidst indications that some of the world’s key central banks may be prepared to act, as uncertainty over China’s slowdown and slumping oil prices continue to plague markets.
- Mario Draghi signalled a possibility that the ECB may provide more stimulus during their next meeting on 10th March, expanding on the Governing Council’s current 1.5 trillion-euros bond-buying program, and potentially including new asset classes.
- The Nikkei Asian Review reported that the BoJ is weighing additional monetary easing, possibly via bond purchases, to counter the impact falling oil prices has been having on its 2% inflation target.
- China’s Vice-President Li Yuanchao stated in Davos last night that the PBOC is willing to keep intervening in the stock market to ensure speculators don’t benefit at the expense of regular investors. He also denied China having any intent on devaluing the yuan.
- The S&P 500 eked out a 0.5% gain, failing to replicate a broad 2% rally in European indices following Draghi’s dovish comments.
- Oil prices rebounded sharply from a 12-year low, as crude oil futures expiring in March traded back up to the $30/bbl handle.
- Spot 1.4330
- Early indication of a possible downside bias as USDSGD hit a low of 1.4308 earlier today, the lowest since 12th Jan.
- A decisive break below 1.4300 would be a key confirmation of the breakout; with the next support level below at 1.4160.
- Spot 0.7000
- Following the risk-on theme overnight, AUDUSD rallied to as high as 0.7021 this morning, the highest in a week.
- To the upside, the 0.7100 handle will be closely watched.
- Spot 1.4282
- Crude oil’s strong rebound led to a pullback in USDCAD as the Canadian dollar strengthened the most in 10 months.
- USDCAD snapped a 13-day positive streak as it plunged back below the 1.4300 level; 1.4187 looks to provide near term support.
- Spot 6.6104
- USDCNH continues to consolidate modestly.
- Despite major moves in other currencies, USDCNH has remained largely steady, trading within the band of 6.5800 – 6.6200 for the past week.
- Spot 8.7978
- Oil’s overnight rebound caused a sharp pullback in USDNOK as it fell 2% from a high of 8.9585 to a low of 8.7754 this morning.
- The 2016 low of 8.7566 looks increasingly likely to be tested.