Key overnight events:
- Fed minutes released overnight signalled that the FOMC may lower forecasts for growth, inflation and the path of future rate hikes when Fed officials meet next month. The minutes indicated that officials were worried about drags and disruptions from a China slowdown, slumping oil prices and financial market turbulence, which are threatening to derail their December projection of four rate increases this year.
- Iran’s Oil Minister Zanganeh said that Iran supports the idea of a Saudi-Russian agreement to freeze output, but stopped short of indicating that Iran would curb its own production.
- Crude oil futures expiring in March rallied to close at $30.66/bbl, 5.6% higher from Tuesday’s close. Futures climbed further this morning, reaching a high of $31.72/bbl, the highest since 8th Feb.
- The S&P 500 index rose for a third day, rising 1.7% as energy stocks fuelled gains. The S&P 500 index has pared almost half of its 2016 losses in four days.
- Spot 1.4037
- USDSGD reached a 2-week high of 1.4113 overnight, before paring gains back below 1.4100 this morning.
- The 100-day moving average of 1.4127 provides some resistance to the upside.
- Spot 0.7165
- Australia’s unemployment rate unexpectedly rose to 6% in January, from 5.8% the previous month; the forecast was 5.8%. Employment in January fell 7,900 from the prior month, missing the median estimate of a 13,000 increase.
- The probability that the RBA will reduce rates by its August meeting climbed to 63%, from 60% yesterday, as indicated by interest-rate swaps.
- AUDUSD dropped to 0.7134 on the wake of the data release, although it has since pared declines. AUDUSD reached a high of 0.7187 last night, almost a 2-week high.
- Spot 1.3657
- The overnight rally in oil drove USDCAD lower, as it continues to approach 2016’s low of 1.3640. A break below it and we could see USDCAD test the next support level at 1.3457.
- Spot 6.5218
- January CPI rose 1.8% year-on-year, less than the 1.9% estimated and up from December’s reading of 1.6%. PPI fell 5.3% over the same period, almost in line with the 5.4% fall forecasted.
- USDCNH dropped to a low of 6.5164 this morning after hitting a high of 6.5384 yesterday.
- Spot 8.5428
- Driven by oil’s overnight rise, the Norwegian krone strengthened. USDNOK fell by 1% from the previous day’s close to a low of 8.5382 last night.
- The key resistance at 8.4465 looks set to be tested again soon. A break below this significant level could drive USDNOK lower to the 8.000 handle.