Key overnight events:
- The S&P 500 Index ended 0.6% higher on Friday’s close, and swung to a 0.3%-gain for the week; technology shares led gainers. A positive gain for the week snapped a three-week losing streak. The US dollar extended its run, as the Bloomberg Spot Dollar Index climbed 0.8% higher for the week, adding to the 2.3% advance made in the past two weeks.
- Crude oil futures ended the week 3.3% higher despite declining 0.9% to settle at $47.75/bbl on Friday. Iran, which will join OPEC’s meeting next week on 2nd Jun, said it won’t join any output freeze and is in fact looking to boost production.
- The Fed’s Boston President Eric Rosengren, a voter in this year’s Fed committee, revealed over the weekend he is getting ready to back a tighter US monetary policy. San Francisco President John Williams, a non-voter, stated that the US economy should be solid enough to merit a rate-hike this year, and the Fed will not cave to political pressure to refrain from tightening during a presidential election year.
- Japan and US finance chiefs clashed at the G-7 meeting over the weekend, with the biggest source of tension coming from the strong yen. Japan’s finance minister Taro Aso signaled a willingness to take action against “disorderly” FX moves, while US Treasury Secretary Jack Lew was unsympathetic, saying there had to be “a pretty high bar” for intervention.
- Japan’s exports fell for a seventh straight month in April as the yen strengthened. Exports declined 10.1% year-on-year, worse than the 9.9%-fall expected, while imports slumped 23.3%, exceeding the 19.2%-drop predicted.
- Spot 1.3785
- USDSGD extended its rally, climbing a further 0.7% for the week ended last Friday. The currency pair pared gains by as much as 0.3% this earlier today, descending back below the 1.3800 handle.
- CPI for April is due for release later today and is expected to show a 0.7% year-on-year fall.
- Spot 0.7241
- AUDUSD recovered 0.4% last Friday, but declined 0.7% overall for the week.
- The 0.7200 handle continues to act as a support, leading the currency pair to gain a further 0.2% earlier today.
- Spot 1.3113
- Retail sales in March fell 1.0% month-on-month, worse than the 0.6%-fall expected. CPI matched estimates, rising 1.7% year-on-year and 0.3% month-on-month.
- USDCAD climbed to 1.3163, its highest in six weeks, following the release of weak retail sales numbers. The currency pair pared gains soon after before closing 1.3% higher for the week at 1.3113.
- Spot 6.5601
- USDCNH ended the week 0.1% higher, registering its highest weekly close since early February this year.
- The PBOC strengthened its reference rate for the second day as the currency pair registered declines earlier today; it still however remains well-supported above the 6.5500 handle.
- Spot 8.3170
- USDNOK capped off the week with a 1.5% weekly gain – its third successive weekly gain.
- The resistance level at 8.4000 and the 50-week moving average of 8.3858 should combine to provide a strong region of resistance for the currency pair. Failing which, a strong run up to 8.5000 could materialize.