Key overnight events:
- Crude oil futures renewed its 12 year low late last night, briefly trading below $31/bbl to reach a low of $30.88/bbl, as it exacerbates its slump. A Bloomberg survey released yesterday indicated that stockpiles probably rose by about 2 million barrels last week.
- Alcoa kick-started the US earnings season as it reported better-than-expected Q4 earnings despite the recent slump in commodity prices.
- US stocks ended marginally higher, despite yesterday’s broad sell-off in Asian markets.
- Spot 1.4386
- Currently still maintaining within its past week range of 1.4300 – 1.4450.
- BNP Paribas reported today that continued elevated market volatility could increase the likelihood of MAS widening its current policy band.
- Spot 0.6984
- Exhibiting continued consolidation around the 0.7000 handle, as AUD traders look ahead to key employment data due for release on Thursday.
- The AUDUSD downtrend which began in 2013 remains strong, and for any reversal to materialize, the major resistance at 0.7382 first needs to be broken.
- Spot 1.4230
- USDCAD made a new high of 1.4245 last night. It is worth noting that the currency pair has made successive new highs in each of the past 5 trading days.
- With weaker oil prices continuing to be a strong catalyst, the next target level of 1.4380 remains on track.
- Spot 6.6005
- The PBOC kept its reference rate little change for the third day in a row at 6.5628, as policy makers moved quickly to dampen expectations of a rapid depreciation of the yuan.
- The central bank has intervened in the overseas currency market over the past 2 days in a bid to prevent further capital outflows of the yuan. The overnight HIBOR this morning climbed to record highs for the second day in a row.
- Highlighting the increased volatility in the yuan, the CNY and CNH converged briefly to parity moments earlier, less than a week after the spread between them hit an all-time high.
- As a result, USDCNH earlier today reached a 1 week low of 6.5716. To the downside, the key support level of 6.5500 remains.
- Spot 8.89273
- USDNOK remains within its week long range of 8.8500 – 9.0000.
- Fresh lows in oil prices have increased chances of a Norges Bank rate cut in March. A break below $30/bbl for oil could most possibly see a rise above 9.0000 for USDNOK.
- Underlying CPI for December came in at +3.0% from a year earlier, less than the expected +3.2%.