May 11, 2016

Key overnight events:

  • The S&P 500 Index rose 1.3%, its biggest advance in two months; the index had not posted a move of more than 1% in either direction in 18 straight sessions, the longest stretch of calm since 2014. Driven by stronger commodity prices, energy and materials producers led gains.
  • After its recent rally, the strengthening US dollar seems to have taken a pause; the Bloomberg Spot Dollar Index fell 0.1%, snapping a  five day winning streak.
  • WTI futures expiring in June rebounded off a month-to-date low to settle 2.8% higher at $44.66/bbl, the seventh time it has closed above its 200-day moving average in two weeks. Gains in oil were fuelled by conflicts and security concerns in Nigeria and Libya which threaten to crimp supply from Africa’s two largest reserves.
  • US wholesale inventories in March rose 0.1% month-on-month, matching estimates, while wholesale trade sales increased 0.7% over the same period, beating expectations of a 0.5%-increase. Elsewhere, the Atlanta Fed’s model upgraded its forecast for 2Q GDP from 1.7% to 2.2%.
  • Goldman Sachs’ chief currency strategist reiterated the investment bank’s dollar bullish stance, and foresees the greenback advancing 15% over the next two years.
  • In Europe, industrial productions in March for Germany, France and Italy all came in lower than expected.

 

USDSGD:

  • Spot 1.3692
  • After advancing for six straight sessions, USDSGD looks poised to snap its winning streak as the currency pair declined by as much as 0.4% earlier today, to a session low of 1.3657.
  • 1.3738 remains the resistance to break; beyond it and the currency pair could enjoy a run up to the 1.3900 handle, where the 50-week moving average lies.
  • The IMF said monetary policy in easing by MAS was “appropriate” given the nation’s GDP growth was below 2%, coupled with the lack of inflationary pressures and lower oil prices. The IMF also added that Singapore’s central bank should remain vigilant against signs of deflation and adjust policy settings further if needed.

 

AUDUSD:

  • Spot 0.7351
  • AUDUSD continues to be supported around its 100-day moving average of 0.7335, as it seeks to consolidate between 0.7300 – 0.7400 after registering a 6% drop in almost 3 weeks.
  • 0.7300 is likely to be a strong support handle as the 50-week moving average of 0.7311 falls within close proximity as well.
  • The Westpac Consumer Confidence Index for May rose 8.5% to 103.2, the highest since Jan 2014.

 

USDCAD:

  • Spot 1.2935
  • Having registered a 3.4%-rise over the past six sessions, USDCAD pared advances from the 1.3000 handle, falling as much as 0.5% to a session low of 1.2902.
  • The Alberta fires are likely to lead to real GDP contraction in May and cap 2Q real GDP growth at an annualized 0.5%, Oxford Economics economist Oren Klachkin wrote in a note.

 

USDCNH:

  • Spot 6.5343
  • The PBOC raised its fixing rate as USDCNH heads for its first session decline in seven days. The currency pair declined back below its 100-day moving average of 6.5397, falling by 0.2% to its session low of 6.5327.
  • The next level of resistance comes in at 6.5592.

 

USDNOK:

  • Spot 8.1968
  • CPI for April rose 0.3% month-on-month and 3.2% year-on-year, with the former matching estimates and the latter missing expectations by 0.1%.
  • Industrial production in March fell 1.3%, despite registering a 0.4%-increase the prior month; industrial production manufacturing for the same period rose by 0.9%, soundly beating the consensus estimate of a 0.2%-drop.
  • USDNOK declined 0.5% to its intraday low of 8.1930, and could potentially retest the 8.0000 handle over the next few weeks.

 

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UEN: 201419754M

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