Key overnight events:
- Crude oil extended its decline, briefly trading below $30/bbl to a low of $29.93/bbl. The $30/bbl handle looks to be well supported, as oil traders look ahead to tonight’s Energy Information Administration report for a clearer picture of US crude stockpiles.
- Markets in Europe and the US were largely in the green overnight, despite the continued slump in commodities. Markets were somewhat stabilized on Tuesday, as China policy makers stepped up their efforts in stabilizing the depreciation of the yuan by intervening in the overseas currency market to reduce yuan outflows.
- Spot 1.4351
- More sideways movement from yesterday as USDSGD continues to consolidate around the 1.43 – 1.44 region.
- ANZ bank warned that a slowdown in China would hit Singapore faster and harder than any other country in the region, citing strong trade, investment and tourism ties between the 2 countries.
- Spot 0.7034
- AUDUSD bounced strongly off the lows from the past 2 days, as a result of better-than-expected China trade data released earlier today.
- The short-term resistance level of 0.7163 could be tested should the rebound persists.
- Spot 1.4234
- Taking crude oil’s lead, USDCAD soared to a 13 year high of 1.4315 late last night, prompting finance minister Bill Morneau to state that the government is “paying attention to the Canadian dollar”.
- With crude oil at a psychological support of $30/bbl and USDCAD close to a major resistance of 1.4380, we could very well witness a possible retracement of USDCAD back to 1.4178 in the near term.
- Spot 6.5723
- China’s trade data provided a positive surprise earlier today. Exports rose 2.3% year-on-year in yuan terms last month (much better than the 4.1% decline expected), and yuan-denominated imports slid 4% over the same period (as compared to the 7.9% decline forecasted), suggesting that the weakening yuan is beginning to boost China’s competitiveness.
- The PBOC continued to keep its reference rate little changed, now for the fourth day in a row, at 6.5630 yuan to the dollar.
- USDCNH reached 6.5604, the lowest in a week, following the positive trade data release.
- Spot 8.8848
- Despite fresh lows in oil, USDNOK failed to make new highs, as it continues to consolidate further around the 8.9000 handle. Last year’s high of 8.8335 provides good support to the downside.
- Norges bank governor Olsen commented that Norway is not in crisis, and sees a recovery possibly starting in the summer of 2017. He added that rates have been cut and could be cut more, and that a weak krone is stimulating for businesses.