May 19, 2016

Key overnight events:

  • The FOMC minutes from its April meeting indicated most policy makers felt that a June hike would be appropriate should the US economy continue to improve, boosting market expectations that they will act next month following recent stronger-than-expected data on consumer inflation, housing starts and industrial production.
  • According to Bloomberg’s Fed funds futures pricing, the probability of a June hike has risen to 32%, from 4% a week ago and 12% prior to the release of April’s minutes.
  • The S&P 500 Index added less than 0.1%, after swinging more than 0.6% in both directions. Bank shares led gainers, offsetting broader declines paced by consumer shares. High dividend-yielding stocks got punished as Treasury yields spiked as much as 11 basis points.
  • The US dollar jumped broadly following the release of the Fed’s hawkish minutes, with the Bloomberg Dollar Spot Index closing 0.8% higher – the most one-day gain since 6th Nov last year.
  • The pound jumped to a 3-month high against the euro and reversed its drop against the dollar after a poll showed the campaign to keep Britain inside the EU had extended its lead.
  • Front-month crude oil futures slipped 0.3%, and a further 1.6% to $47.41/bbl in Asia trading hours this morning, as US crude stockpiles unexpectedly increased by 1.3 million barrels last week.
  • Moody’s lowered its growth forecast for the US to 2% from 2.3% in 2016, to reflect weakness in 1Q, followed by 2.3% growth in 2017.
  • Investors will look out for speeches by the Fed’s Fischer and Dudley tonight to confirm if a June hike is seriously on the calendar.

 

USDSGD:

  • Spot 1.3812
  • USDSGD extended its gains today, climbing 0.5% higher to 1.3829 – the highest in two months.
  • A run up to 1.3941, the next level of resistance, looks probable. The 50-week moving average lies in close proximity at 1.3906 lies.

 

AUDUSD:

  • Spot 0.7215
  • Australia’s economy added 10,800 jobs in April, less than the 12,000 forecasted and the 25,600 jobs added the in prior period. The unemployment rate remained at 5.7%, lower than the 5.8% estimated. Gains in employment were fuelled by part-time roles as full-timers fell.
  • AUDUSD sank as much as 1.0% to 0.7209, taking out its 200-day moving average in the process. The next support comes in at the 0.7000 psychological handle.

 

USDCAD:

  • Spot 1.3055
  • USDCAD extended gains to a 6-week high, rallying 0.7% to 1.3057 earlier today, following oil’s decline and a US dollar rally overnight.
  • After struggling to break above the 50-day moving average and 1.3000 handle for weeks, the currency pair could potentially trade higher up to the 1.3300 region, following its breakout.

 

USDCNH:

  • Spot 6.5658
  • The PBOC set its reference rate at the 6.5531, the weakest in over 3 months, following a strong US dollar rally overnight.
  • USDCNH jumped 0.9% to 6.6145 overnight before paring losses back to the 6.5600 handle this morning.
  • A resurgent US dollar is shaking up a strategy that the PBOC has pursued over the past 3 months – a steady rate against the dollar, combined with depreciation against other major currencies. Further weakness in the yuan could risk a repeat of the turmoil of Jan 2016 and Aug 2015, when a tumbling exchange rate roiled global markets.

 

USDNOK:

  • Spot 8.3272
  • USDNOK jumped 1.3% to a session high of 8.3315 earlier today, reaching its highest level in a month, helped on by weaker oil prices and a stronger US dollar.
  • The resistance around 8.4450 is likely to be tested over the near-term.

 

 

© Jachin Capital Pte Ltd

UEN: 201419754M

The contents of this document are for information only and is taken or compiled from sources that we, Jachin Capital Pte Ltd, believe to be reliable. To the maximum extent permitted by law, we do not make any representation or warranty (express or implied) that this information is accurate, timely or complete and it should not be relied upon as such. Opinions expressed are our current opinions as at the date of this document only and are subject to change without notice. We endeavour to update on a reasonable basis the information discussed but regulatory, compliance or other reasons may prevent us from doing so. The publication and distribution of this document is not and does not imply any form of endorsement of any person, entity, service or product described or appearing here. This is not and does not constitute or form an offer to buy or sell nor the solicitation of an offer to buy or sell any security or financial instrument nor to participate in any particular trading or investment strategy. We are not soliciting any action based on this document. The information, services and products described or appearing here are intended only for Accredited Investors (as currently defined in the Securities and Futures Act) and are not intended for nor targeted at the public in any specific jurisdiction. This information does not take into account the particular investment objectives, financial situations or needs of individual investors. Investors should seek independent financial, tax or legal advice or make independent investigations as considered necessary or appropriate before making an investment decision. Investments involve risk. Any past performance, projection, forecast or simulation of results is not necessarily indicative of the future or likely performance of any investment instrument.

Essential SSL