Key overnight events:
- US stocks tumbled overnight as the S&P500 fell 2.5%, closing below 1900 – a level which it has closed below just 5 times in the past 14 months. The Dow Jones Industrial Average declined 2.3% while the Nasdaq Composite slumped 3.6%. The broad sell-off was largely led by consumer and tech shares as Amazon dropped 5.8%, Apple plunged 2.6%, and Netflix plummeted 8.6%.
- Crude oil continued to trade just north of the $30/bbl handle. EIA data indicated that stockpiles in the US gained by 234,000 barrels last week.
- Brent oil in London traded below $30/bbl for the first time since 2004 amid speculation that sanctions on Iran may be lifted as soon as Monday, exacerbating the global oil glut situation.
- The Beige Book report released last night indicated that the US economy broadly expanded across most cities in the past 6 weeks, and the labour market has continued to strengthen. However, signs of higher wages and inflation remain lacking.
- Spot 1.4384
- USDSGD remained largely within its traded range over the past week.
- 1.4300 looks to be strongly supported.
- Spot 0.6945
- AUDUSD dropped to 0.6920, its lowest level in 4 months, despite better-than-expected employment data released this morning.
- December employment change came in at -1k, better than the 10k decline expected, and unemployment rate remained steady at 5.8%, a touch better than the 5.9% forecasted.
- Any further drop for AUDUSD would first warrant a break below the Sep 2015 low of 0.6896.
- Spot 1.4368
- USDCAD took out yesterday’s high to reach 1.4383 this morning, testing the key resistance level of 1.4380 for the first time in 13 years.
- A decisive break below $30/bbl for crude oil remains a key driver to upside risk for USDCAD.
- Spot 6.5998
- The PBOC left its reference rate little changed again today at 6.5616, 0.2% higher from yesterday.
- USDCNH looks set to end a 5 day decline, bouncing off yesterday’s low of 6.5604 and trading upwards of the 6.6000 this morning.
- Near term resistance of 6.6077 has already been tested once today, and could potentially be broken later today.
- Spot 8.8358
- USDNOK fell to as low as 8.7903 last night prior to the release of EIA data, and looked to be headed for its biggest 2 day drop since Dec 10th. Losses were soon pared though after increased oil inventories were reported.
- The 8.8000 level looks to be well-supported.