Key overnight events:
- Crude oil futures expiring in March surged 12% on Friday as data reporting US oil-rig count posted its biggest 2-week drop since April. The rally stopped short of breaking above the $30/bbl handle though, as it reached a high of $29.66/bbl towards the close.
- The S&P 500 index rebounded 2% on Friday, buoyed by oil’s surge and a 0.2% month-on-month increase in January retail sales, better than the 0.1% expected.
- China equity markets reopened today after a week-long holiday in which Japan stocks tumbled 11% and HK-listed Chinese shares fell almost 7%
- Earlier today, Japan reported that 4Q GDP fell by an annualized 1.4% quarter-on-quarter, worse than the 0.8% decline forecasted.
- The Bank of Japan’s Deputy Governor Nakaso said that the BoJ has been talking with global peers about market turmoil as speculation grows of a coordinated response ahead of next week’s G-20 meeting in Shanghai.
- Spot 1.4022
- 1.3900 continues to be a decent support level over the past few days. USDSGD has been buoyed by its 200-day moving average of 1.3932 as well.
- December retail sales is due out later today, with a year-on-year increase of 3.6% being expected. The prior reading was 4.7%.
- Spot 0.7146
- Although RBA Governor Stevens indicated in a recent parliamentary testimony the bank has flexibility to cut rates due to low inflation, the upcoming January employment report is likely to offer little urgency for easing given a stable unemployment rate, according to Barclays in a note dated 14th Feb.
- AUDUSD remains largely unchanged from last week’s close of 0.7112, as it still remains directionless, trading between the range of 0.6974 – 0.7153 for the past week.
- Spot 1.3811
- USDCAD continues to trade below the 1.4000 resistance level, falling further and breaking below the 1.3900 handle towards the close on Friday.
- Despite the longer-term uptrend still being intact, the shorter-term momentum is towards the downside and price actions indicate that the 100-day moving average of 1.3597 could be tested.
- Spot 6.5190
- China’s yuan surged by the most in more than a decade, catching up with dollar declines during a week-long holiday, after PBOC chief Zhou voiced support for the currency and set its fixing at a 1-month high.
- USDCNH fell to a low of 6.4996 at the open this morning, marking a 3.9% decline from the high of 6.7618 in early January.
- China’s exports declined 11.2% in January in USD terms from a year earlier, worse than the 1.8% decrease expected. Imports fell by 18.8% over the same period, also worse than the 3.6% decline which economists were forecasting. The slide in exports suggests that the yuan’s depreciation since August last year has yet to result in a sustained boost to the competitiveness of China’s factories, as reported by Bloomberg.
- Trade balance figures came in at a record trade surplus of 406.2 billion yuan (US$62.3 billion).
- Spot 8.5935
- USDNOK is largely unchanged from Friday’s close, trading around the 8.6000 handle. It has trended sideways for the past week, staying within the range of 8.5017 – 8.6531.
- The recent of 8.4465 has been tested twice in the past 3 months; a clean break below it and USDNOK could test the next support of 8.3166, which is its 200-day moving average.