Key overnight events:
- The Fed’s Vice Chairman Stanley Fischer adopted a dovish tone by commenting that FOMC’s next move is unclear as it is too difficult to gauge the impact on the US economy from recent turmoil in financial markets and uncertainty over China.
- The S&P 500 index reacted positively to Fischer’s comments, erasing losses of as much as 1% to close little changed on the day.
- US ISM manufacturing for January came in at 48.2, weaker than the 48.4 expected, posting its fourth consecutive sub-50 reading.
- Crude oil futures expiring in March fell to an intraday low of $31.29/bbl in reaction to softer-than-expected China PMI data released yesterday. However, data from the US Commodity Futures Trading Commission show that hedge funds have increased bullish bets in oil by the most since 2010, as speculators’ net-long positions in WTI increased by 35% in the week ended 26th Jan.
- Spot 1.4231
- USDSGD continues to be supported above the 1.4200 level. With the 50-day moving average residing at 1.4193, the currency pair looks poised to remain well-supported around the 1.4200 handle.
- PMI data is due tonight and is expected to come in at 49.7, higher than the prior month’s reading of 49.5.
- Spot 0.7116
- As widely expected, the RBA left rates on hold today, extending its interest-rate pause for a ninth month as the declining AUD helps fuel hiring among local industries that are gaining in competitiveness.
- The rate decision follows the biggest annual jobs gain in nine years in 2015, suggesting there is no immediate need to further stimulate the economy.
- AUDUSD climbed to an intraday high of 0.7129 following the rate announcement, but first needs to break above the 100-day moving average of 0.7149 in order to continue its recent ascent from a 6-year low of 0.6827.
- Spot 1.3972
- Partly due to broad USD weakness overnight, USDCAD fell below the 1.4000 level to reach a low of 1.3909, its lowest since 6th Jan.
- The 50-day moving average may provide further support at 1.3899.
- Spot 6.6186
- Following yesterday’s soft PMI data release, USDCNH climber higher towards the top end of its 2-week long range, trading at a high of 6.6217 this morning.
- In a statement posted on its website, CFETS (China Foreign Exchange Trade System) stated that China will increase the flexibility of the yuan’s exchange rate against its currency basket as it continues to improve its market-oriented exchange rate formation mechanism.
- Spot 8.6974
- Manufacturing PMI released yesterday came in at 49.2, well ahead of the 46.0 forecasted. Despite the better-than-expected data, its effects were somewhat negated by a drop in oil prices.
- As such, USDNOK continued to trade within the previous day’s range, with 8.6000 looking to be a good support level.