Key overnight events:
- The S&P500 closed down 2.4% last night. The index is down 4.9% this year, capping its worst start since 1928.
- USD was largely weaker across the board as yesterday’s rout in China began to cast doubts on the outlook of higher rates in the US.
- Following yesterday’s second trading halt in 3 days, China’s security regulator suspended its stock circuit-breaker system, in a bid to help stabilize its markets.
- Crude oil dropped to $32.10/bbl, its lowest level in 12 years, before paring declines and trading back up to the $34/bbl handle.
- Spot 1.4337
- After rising to a 6 year high of 1.4431 yesterday, USDSGD pared its gains this morning, as Barclays Plc reported that further weakening of the Singapore dollar is set to slow as it is nearing the bottom of the policy band set by MAS.
- The next resistance of 1.4530, a level not seen since 2009, remains in target, while 1.4210 provides support to the downside.
- Spot 0.7059
- AUDUSD slid to 0.6981 last night, its lowest level since Sep 29.
- The downward trend remains strong and should the 2015 low gets broken, the next key support level of 0.6800 is likely to be tested.
- Spot 1.4079
- The USDCAD upward trend continues overnight, making a higher high of 1.4170. An intraday support of 1.4050 seems to be forming nicely.
- Sideways movement is expected for the rest of the day as the market prepares for the release of tonight’s employment data.
- In addition, BOC governor Poloz stated last night that the central bank is not trying to match the recent rate increase in the US, indicating that a weak Canadian dollar is here to stay.
- Spot 6.6793
- Earlier in the day, the PBOC set its reference rate at 6.5636 CNY to the dollar, marginally lower from yesterday’s rate of 6.5646, and thus strengthening the yuan fix for the first time in 9 days.
- USDCNH briefly declined below prior day’s low to 6.6525. The longer term weakening CNH trend remains strongly intact though, and the 2010 level of 6.7850 could be attained within the next few months.
- Spot 8.8952
- Norges Bank governor Olsen stated that he is not considering Krone intervention despite its weakening trend.
- Furthermore, Norway’s finance minister Siv Jensen maintained that the Krone is playing a significant part for Norwegian businesses by making them more competitive.
- Further consolidation around the 8.9000 handle is expected, at least until the release of industrial production figures later in the day.