Key overnight events:
- Despite the 6% fall in Chinese equities yesterday, US stocks advanced broadly as investors chose to focus on oil’s recovery, corporate earnings, as well as the Fed’s first policy meeting of the year which started yesterday. The Dow Jones Industrial Average notched its best day of the year, rising 1.8%, while the S&P 500 closed above the 1900 level, ending the session 1.4% higher.
- The Fed is widely expected to hold rates steady tonight, though investors will be keenly looking for hints in its statement on whether they are backing away from the expected path of 4 rate hikes in 2016.
- Crude oil staged a recovery, soaring 11% higher from yesterday’s low of $29.25/bbl to a high of $32.41/bbl last night, after Iraq’s oil minister commented that Saudi Arabia and Russia are now more flexible about cooperating to cut output.
- Apple, the heaviest weighted stock in the S&P 500 index, forecasted its first sales drop since 2003, and stated that expansion in China is no longer enough to maintain its growth of smartphone sales.
- Spot 1.4274
- USDSGD fell to a 3 week low of 1.4242, amid wide expectations that the Fed will refrain from raising rates tonight.
- In a 26th Jan note, Nomura wrote that there is a rising risk MAS will ease FX policy in April due to external uncertainties weighing on the economy and weak domestic inflation prospects.
- Spot 0.7025
- Consumer prices released this morning advanced 0.4% quarter-on-quarter and 1.6% year-on-year in 4Q2015. Both readings beat estimates of +0.3% and +1.6% respectively.
- AUDUSD climbed to a high of 0.7041 in the wake of the positive data release, and looks poised to break above the resistance level of 0.7050 soon.
- The next resistance of 0.7150 remains in sight, as chances of a RBA rate cut next Tuesday have been reduced.
- Spot 1.4131
- In the wake of oil’s rally overnight, USDCAD continued its recent retracement from 12 year highs, falling to a 3 week low of 1.4045.
- 1.4000 looks set to be the next level of support.
- Spot 6.6125
- USDCNH continues to consolidate in a tight range over the past few sessions as the PBOC’s recent efforts in stabilizing the yuan seems to have taken effect.
- Spot 8.7072
- USDNOK continues to make new lows this year, trading down to a low of 8.6773 last night.
- Having broken convincingly below the 50-day moving average, USDNOK remains on course to test the next support level at 8.6000.